In another step in the rapid evolution of Indian nuclear policy, on October 27, 2010, Dinkar Khullar, India’s representative to the International Atomic Energy Agency, signed the Convention On Supplementary Compensation For Nuclear Damage (CSC) on behalf of the Government of India, joining 13 other signatory countries. It is clearly a fulfilment of one among many commitments made by India to the United States of America pursuant to the Agreement for Cooperation between the Government of the United States of America and the Government of India concerning peaceful uses of nuclear energy (123 Agreement), (123 Agreement) released on August 3, 2007. Previously, on September21st, the President of India signed into force The Civil Liability for Nuclear Damage Act, 2010 (the Liability Act), creating a nuclear liability regime in India.

The CSC Current Status

At the outset, it must be recognized that the CSC only enters into force when five countries with more than 400,000 units of total installed nuclear capacity sign and ratify the convention. Currently 14 countries have signed the convention but only four have ratified it. At present the US is the only party to the convention with substantial installed capacity of approximately 300,000 units of nuclear capacity. India’s nuclear capacity represents about 4 percent of that of the US. Therefore it is unclear how far India’s signing by itself takes the CSC towards enforceability.

Incompatibility between the Indian nuclear liability regime and the CSC

Since the signing, many observers, both inside and outside India, have commented on the apparent incompatibility between the nuclear liability regime embodied by the CSC and that of the Liability Act. In general, the CSC nuclear liability regime channels and restricts liability to the operators of nuclear plants, whereas the Indian legislation extends liability beyond the operator of a nuclear power plant by giving the operator the right of recourse against suppliers to the operator’s nuclear power plant. Although many observers have called for the Liability Act to be amended to restrict liability to the operator, it is fairly clear that the Indian government, at this time, does not have the political support to do so and its representatives have declared there is no intention to amend the Liability Act. Therefore the question to explore is what may be the benefit of India signing the CSC.

International Acceptability

There are many reasons that both India and the US may welcome India’s accession to the CSC. For one, whether the accession results in ratification or not, it does furthers the international acceptability of the CSC in a number of jurisdictions and supports the foreign and trade policy of the United States.

Nuclear export waiver

Some observers have felt that the signing of the CSC might allow US President Barack Obama to issue a waiver under the US energy regulations which restrict US nuclear commerce with countries like India who have not signed and ratified the Nuclear Non-Proliferation Treaty. The presidential waiver would allow American companies like GE and Westinghouse to join their French and Russian counterparts in the race to build new nuclear reactors in the Indian market. Although American companies may want changes to the new Indian liability regime they may not wish to be left behind by the French and Russian competition. That India signed the CSC so close to the US President’s visit to India this week may also be seen as an effort to give a fillip to the prospects for US nuclear commerce in India.

Indian motivation

The Indian government on the other hand, after analysing the situation, may also have felt that signing the CSC may allow it look like a good global citizen, and allow commercial negotiations to start between US and Indian companies. It is quite possible that the Indian government may have wanted to mirror domestic legislation to the CSC but was simply unable to do so due to domestic historical and political considerations. India may wish to postpone the issue of nuclear liability until later when commercial, government-to-government or legislative workarounds can be considered. India may also want to blunt any joint political pressure from Russia, France and the US, as it seeks to navigate various international restrictions on its nuclear programme.

Uncertain outcome

In general there are many good reasons for both India and the US to want India to sign the CSC. However, those reasons may not yet have much to do with India’s nuclear liability regime. India signing the CSC is certainly symbolic in terms of India’s continuing incorporation into the international nuclear framework. Whether it adds anything more than conviviality and political cover to ongoing discussions between the Indian government and various nuclear stakeholders remains to be seen.