Should India Amend its Nuclear Energy Laws

India is considering amendments to the Civil Liability for Nuclear Damage Act (CLNDA), 2010, and the Atomic Energy Act (AEA), 1962, to allow private companies to build and operate nuclear energy facilities.

Arguments in favour of the Proposed Amendment

• Target Goal: India aims to expand its nuclear energy capacity from 8 GW to 100 GW by 2047, supporting its clean energy goals.
• Foreign Help: India cannot meet its 2047 target through domestic capacity alone; it must enable foreign company participation.
• Current Legal Roadblock: The existing liability regime in India prevents foreign investment. The 2008 U.S.-India nuclear deal anticipated such participation, which remains unrealised due to legal constraints.
• Entry barrier:  France, Japan, and U.S. companies cite the liability law as a barrier.  Even Russia’s Rosatom, a state-owned enterprise, initially needed a contractual indemnity.
• Post-2010 Constraint: India’s 2010 law prevents private contractual indemnities, making previous mechanisms illegal.
• Domestic Resistance: After the 2010 Act, Indian suppliers began refusing component supply, notably at Kovvada.
• NPCIL’s Workaround: NPCIL attempted to waive liability contractually, claiming failure due to NPCIL specifications would be NPCIL’s fault — a legally untested logic.

Arguments Against the Proposed Amendment

• Faulty Assumptions: Expansion is not hindered by lack of investment. No major supplier country has scaled up nuclear capacity as fast as India plans, not the U.S., France, Britain, or Japan. 
  • Only China has done so, but Chinese investment in India is not viable.
• Political-Economic Motive:  There is clear pressure from the U.S. to revise India’s law — both for strategic and commercial reasons.
• Policy Dilemma:  If India seeks foreign participation in nuclear energy, it must amend its nuclear liability law.
• Uncertain Present Capacity:  India’s current supply-side capacity for nuclear infrastructure is limited.
• Investment is Long-Term: Western suppliers may scale up if market demand rises over the next few decades.
• Strategic concern: Concerns exist about allowing private firms in a sector with national security risks, especially regarding Small Modular Reactors (SMRs).
  • India earlier benefited from Russia’s VVER-1000 technology transfer. The question is whether such depth of cooperation will recur.

Technology Transfer Issue

• Driven by Profitability: Private firms’ decisions on technology transfer depend on commercial viability, not government policy.
• Licensing Limits:  The U.S. may restrict what tech can be transferred — as seen in Westinghouse-China AP1000 episode.
• Partial Transfer: Even Rosatom withheld full tech: India built sub-components, but “hot section” control remained with Russia.
• Optimism Around SMRs:  New SMR firms are more open to tech transfer to gain market access and scale up profits.
• Defence Sector Analogy: India raised FDI from 25% to 100% in defence but saw no major tech transfer.
• Untested:   SMRs are untested in India, and past efforts suggest foreign players may still withhold core tech.
• India’s  Plans: India is investing in 5 small reactors using the pressurised heavy water cycle it already knows  focus should be on scaling these efforts.

Small Modular Reactors

• Convention on Supplementary Compensation (CSC): CSC Offers a Balanced Framework
  CSC aims to enable nuclear expansion by clarifying liability and compensation mechanisms.
• Key Principles of CSC: Operator is liable in case of accidents, Pre-accident funds are created via a three-tiered pool, Supplier liability is allowed only via contract or in cases of wilful misconduct.
• Goal: CSC avoids lengthy lawsuits   focus is on immediate relief to affected people.
• High Costs: Many SMRs use passive safety designs, but capital costs remain high.
• Unproven Manufacturing Model: SMRs are assumed to be made via assembly line and modular installation, but this remains unverified.
• Doubt:  Tellis supports SMR technology maturity, but is doubtful about the economic efficiency of the mass manufacturing model.

Conclusion

India’s proposed nuclear law amendments must balance foreign investment incentives, technology access, safety and liability, and the economic feasibility of new models like Small Modular Reactors (SMRs) reflecting a complex interplay of policy, security, economics, and international cooperation in advancing its clean energy goals.