Indian interests protected in nuke deal with US
When Prime Minister Narendra Modi and US President Barack Obama announced in January that they had achieved a “breakthrough understanding” on operationalising the historic civil nuclear deal that had been signed a decade ago, it had been rightly pointed out that there was little clarity on what exactly the new agreement looked like.
This, in turn, had led to some loose talk that either the whole deal was a PR stunt or that the Modi Government had caved to American pressure and agreed to some sort of a compromise that hurt Indian interests. The clarifications issued by the Ministry of External Affairs on Sunday should put these concerns, if not outright conspiracy theories, to rest. It has now been made clear that there will be no amendment of the 2010 Civil liability for Nuclear Damage Act which has been at the crux of the logjam. The law had made it almost impossible for American suppliers to get into the Indian market.
No matter how vast or lucrative the market, the risks were deemed to be too great. Nuclear suppliers had argued (and not entirely without merit) that the law, one of the toughest worldwide for accountability and compensation in the case of a nuclear accident, was unfair to them and had no parallel around the world. But the Government was able to successfully argue that the law was indeed compatible with international norms.
Spelling out the actual interpretations of two contentious clauses helped achieve this breakthrough: On Section 17 of the ClND Act, which allows nuclear plant operators the ‘right to recourse' — in other words, claim compensation — from suppliers in the case of an accident, the MEA explained that the provision could only be invoked if the supplier and the operator had agreed to it at the time of starting business.
The other clause that was a cause for concern was Section 46 which could open up suppliers to compensatory claims from any member of the public who may have suffered in the event of a nuclear accident. The MEA has now clarified that the second provision would only be limited to operators and will not include suppliers. Additionally, the MEA also made official the broad contours of the insurance pool that will be floated to cushion suppliers and operators.
Though the details here will be known only after the final agreement has been signed by both sides, we know that India has proposed (and the US is considering) a Rs1,500-crore insurance pool, half of which will be funded by public sector insurance firms and the remaining by the Government of India.
Critics have been quick to slam this move as one that puts the entire financial liability on the Indian taxpayer but the MEA has underlined that this is far from the truth as the ClND Act already requires the operator to maintain “financial security to cover its maximum liability for civil nuclear damage”. Another contentious issue has been the tracking of nuclear material sent to India by the US.
While India, understandably, does not want any additional monitoring of its nuclear facilities, the US Government, by law, is obligated to ensure that any nuclear fuel it sells to India for civilian purposes is not used for military purposes. Here too, the MEA has clarified that there will be no “US safeguards”, just safeguards delineated by the International Atomic Energy Agency.