Opinion While Obama is here

Reports of progress in India-US talks on breaking the deadlock on the nuclear liability issue, in the run-up to President Barack Obama’s visit, are welcome. After negotiating a path out of nuclear isolation via the Indo-US civil nuclear deal inked in 2005, New Delhi passed an untenable nuclear liability law in 2010. The liability problem does not concern only the US but all of India’s nuclear partners, and its own private sector. This self-inflicted isolation has endangered India’s nuclear power plans at a time when it needs to increase power generation while reducing its carbon footprint by cutting back on thermal power and diversifying its energy basket.

The assurances sought by the US concern two particularly problematic provisions of the law. Section 17(b), which deals with the “right to recourse”, places liability in case of a nuclear accident on the supplier. This provision is a contravention of international law, violating the Convention for Supplementary Compensation that India signed in 2010. Global regulations fix liability solely on the operator. Section 46 keeps the door open for suppliers being sued under the tort law as well, and India’s claim that it concerns only operators had not convinced the US so far. While Washington’s climbdown from seeking an amendment to the liability law to requiring guarantees is good news for Delhi, India’s proposal for creating an insurance pool to cover supplier liability needs more deliberation. It is one thing to insure operator liability. It is another to push suppliers towards large insurance covers that will make nuclear energy unaffordable. A pool that all stakeholders contribute to might mitigate that likelihood, but details are awaited.

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The UPA government’s mismanagement of the liability law effectively shut the door on foreign equipment suppliers and the BJP’s opportunism in opposition did not help matters. The UPA’s last-minute finessing by making the right to recourse the operator’s call tried to limit the damage, but it was not enough. The NDA government, which ratified the IAEA’s Additional Protocol in its first month in power, seems to be making a determined effort to address the problem. Walking India out of the nuclear liability quandary is not just a matter of convincing the US. But it would be significant if the Indo-US nuclear deal could be operationalised while Obama is here.