Over the weekend, President Obama and India’s Prime Minister Narendra Modi announced progress on civilian nuclear cooperation. As noted in an earlier post and op-ed, the benefits of a 2008 U.S.-India agreement on nuclear cooperation that was hailed in many quarters as an opportunity to facilitate a rapid expansion of India’s civilian nuclear program, have yet to materialize. Although India foresaw expanding its civilian nuclear program in the wake of the 2008 agreement, India’s nuclear liability law has proven to be an obstacle to new nuclear development — much to the chagrin of the agreement’s supporters. In particular, the aspects of India’s liability law that open up vendors and suppliers to litigation in the event of an accident have prevented international vendors and suppliers from participating in India’s nuclear industry.
While the most straightforward solution would be to change those aspects of India’s liability law that conflict with international norms, a workaround has been found that will leave India’s nuclear liability law intact, while ostensibly providing protection for international vendors and suppliers who participate in Indian nuclear projects. The approach to liability involves creating an Indian nuclear liability insurance pool that would include contributions from the Indian-government-owned insurance company and other insurers, along with a significant contribution (up to half) from the Indian government. At a high-level, the use of an insurance pool is common internationally, with more than 25 such pools already in existence around the world. However, the details of the insurance policies — and in particular the manner in which they handle the right to recourse and tort claims in India’s liability law — apparently remain to be worked out. The statements by President Obama and Prime Minister Modi hailing the development as a “breakthrough” on civilian nuclear cooperation strongly suggest that an acceptable arrangement for all parties, including the U.S. Government, U.S.-based nuclear suppliers, India, and India-owned nuclear companies and insurers, has been identified.
Resolving the liability issue also paves the way for India to ratify the Convention on Supplementary Compensation (CSC), which would further integrate India into the international nuclear community. As discussed here and here, the CSC is an international instrument that would establish a global nuclear liability regime with consistent application of key principles of nuclear liability.
While there are undoubtedly concerns surrounding implementation that remain, resolution of the thorny issues of nuclear liability is undeniably a major achievement for the U.S. and India. India may finally be poised to advance the development of new nuclear projects using international technology after years of delay. That progress couldn’t come soon enough.