India Set to Ease Nuclear Liability Law to Attract Global Investment
India is preparing to overhaul its nuclear liability law in a bid to expand its nuclear power capacity and attract foreign companies. The move aims to deliver Prime Minister Narendra Modi’s ambitious energy goals while smoothing trade relations with the United States.
Why Change the India Nuclear Liability Law?
India’s existing nuclear liability law, officially called the Civil Nuclear Liability Damage Act of 2010, places unlimited accident liabilities on equipment suppliers. For years, this clause scared off major US players like General Electric and Westinghouse Electric, despite strong nuclear ties between India and the US since 2008.
By limiting suppliers’ liability and clarifying accident-related risks under the India nuclear liability law, the government hopes to unlock large-scale foreign investment into the power sector.
India Nuclear Power Expansion Plans
India has set its sights on increasing its nuclear power output twelvefold, aiming to reach 100 gigawatts by 2047. This leap forms part of India’s bigger plans to meet rising energy demand while sticking to its net-zero targets.
To make this possible, the government plans to remove a key clause in the current liability law. Moreover, sources reveal that a new draft law, drawn up by the Department of Atomic Energy, proposes to cap the accident liability that suppliers face. Specifically, the draft reportedly provides:
- The right of the nuclear operator to seek compensation from the supplier will be limited to the contract value and to a specified period.
- Lower liability caps for small reactor operators ($58 million).
- A fixed cap for large reactor operators, expected to remain at $175 million.
The Impact on Trade and Foreign Investment
Opening up the India nuclear power sector is closely linked to bigger international trade ambitions. The plan to ease the India nuclear liability law is especially designed to lure US-based contractors, who have so far stayed away from the Indian market due to the risk of unlimited damages in case of an accident.
Negotiations are ongoing between India and the US over a major trade deal, with the aim of boosting bilateral trade from $191 billion last year to $500 billion by 2030. Passage of this amended law is likely to play a key role in sealing such agreements.
Analysts say the move puts India in line with global norms, which place the main burden of plant safety on the operator, not the supplier. This shift is expected to level the playing field for American firms, as they have faced tougher rules than their French and Russian competitors, whose governments support or underwrite liabilities.
Bhopal Disaster and the Legacy of Liability
The strict India nuclear liability law traces its origins to the 1984 Bhopal gas tragedy, one of the world’s deadliest industrial accidents. At least 5,000 people died after toxic gas leaked from a US-owned Union Carbide plant. While Union Carbide paid $470 million in 1989 as a settlement, many in India saw this sum as too low.
This memory shaped the 2010 law, designed to protect citizens and the state from a repeat. While the intention was good, the lack of limits on supplier liability effectively shut Western companies out of the Indian reactor market for over a decade.
Easing the Law in Line With International Norms
Many global nuclear agreements place responsibility for plant safety and accident compensation squarely with the operator, usually a government or state-backed company. The proposed Indian amendments bring the India nuclear liability law in line with these international standards.
“India needs nuclear power, which is clean and essential,” says Debasish Mishra, chief growth officer at Deloitte South Asia. “A liability cap will allay the major concern of the suppliers of nuclear reactors.”
Private Investment in India’s Nuclear Power Sector
To help fund its nuclear ambitions, the Indian government is encouraging private firms to step in. Several powerful conglomerates—including Reliance Industries, Tata Power, Adani Power, and Vedanta Ltd.—are discussing investments said to be worth over $5 billion each.
By capping risks, the government is sending a clear message to both Indian and foreign investors that it’s serious about making the nuclear sector more business-friendly.
What’s Next? Timing and Political Hurdles
Modi’s government is confident it can pass the amended nuclear liability law in the upcoming monsoon session of parliament, slated for July. Sources suggest political approval is likely, given the strategic importance of the energy transition and international partnerships at stake.
Departments involved in the process—including the atomic energy department, prime minister’s office, and finance ministry—have not offered public comment so far.
Balancing Safety, Investment, and Growth
Tough lessons from Bhopal still sting in the national memory, but the government believes that nuclear power is vital for India’s long-term growth and climate goals. The decision to change the India nuclear liability law is rooted in a desire to protect Indian citizens while also opening new doors for investment and technology.
With the proposed law change, India looks set to make its nuclear sector more attractive to global suppliers, increase its energy output, and support cleaner growth. Getting this balance right will be key to India’s nuclear future.
Source
Reuters – India plans to ease nuclear liability laws to attract foreign firms, sources say
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