NUCLEAR ENERGY LAWS OF INDIA
- India is planning major changes to its nuclear energy laws, specifically the Civil Liability for Nuclear Damage Act (CLNDA), 2010, and the Atomic Energy Act, 1962.
- These changes, announced during the Budget speech on February 1, 2025, aim to resolve legal challenges that have hindered cooperation with foreign nuclear companies.
- The goal is to encourage American and French companies to invest in India’s nuclear energy projects.
CIVIL LIABILITY FOR NUCLEAR DAMAGE ACT,2010
The CLNDA was introduced to provide a legal framework for compensating victims of nuclear accidents.
Key parts of the law include:
- Operator Liability: It holds the operators of nuclear plants strictly responsible for accidents, even if the incident was not their fault.
- Supplier Liability: If the accident is caused by defective equipment, operators can claim compensation from suppliers.
- Financial Security: Operators must have enough funds set aside to cover damages, with the government stepping in if the cost exceeds a certain amount.
THE 2012 AMENDMENT IN CLNDA
- The Indian government added the supplier liability clause to the CLNDA in response to concerns over incidents like Bhopal.
- This clause held suppliers responsible for damages caused by defective equipment or materials.
- The aim was to ensure that foreign companies couldn’t escape full liability in case of accidents in India.
- However, this provision caused difficulties for foreign nuclear companies like Westinghouse and EDF, who feared they would be financially responsible for accidents related to their supplied equipment, which slowed down major projects.
ATOMIC ENERGY ACT, 1962
This law controls India’s nuclear industry, and its key points include:
- Government Control: The central government has exclusive rights to produce and use nuclear energy.
- Private Sector Limitations: Private and foreign companies have been restricted from owning or running nuclear power plants in India.
CHALLENGES FACED BY US & FRENCH FIRMS
Foreign companies, especially from the U.S. and France, have had problems with the CLNDA’s strict rules on liability, particularly the supplier liability clause. Key issues include:
- Westinghouse Electric Company (WEC) and Electricité de France (EDF) were worried about the financial risks tied to the supplier liability clause, which made them hesitant to invest.
- Because of this, important nuclear projects have been delayed for more than 15 years, including:
- Westinghouse signed an agreement in 2012 to build six AP1000 reactors at Kovvada, Andhra Pradesh.
- EDF signed an agreement in 2009 to build six EPR1650 reactors at Jaitapur, Maharashtra.
- India’s current nuclear power capacity is 6,780 MW, with 22 reactors, and Rosatom (Russia) is the only foreign operator in India’s nuclear sector.
KEY BUDGET ANNOUNCEMENTS
- The Budget 2025 made key announcements about changes to the CLNDA and Atomic Energy Act.
- ₹20,000 crore has been allocated to develop five Small Modular Reactors (SMRs) by 2033.
- Nuclear Energy Target: India aims to reach 100 GW of nuclear power capacity by 2047 as part of its long-term energy goals.
- This will help India meet its carbon emission reduction targets.
PROPOSED AMENDMENTS
Civil Liability for Nuclear Damage Act (CLNDA), 2010:
- Supplier Liability Revision: The amendments will separate the operator’s liability from the supplier’s liability, bringing India’s laws in line with international standards (such as the International Convention for Supplementary Compensation for Nuclear Damage (CSC)).
- Recourse Mechanism: The provision that allows operators to seek compensation from suppliers for defective equipment may be changed or removed, making it easier for foreign companies to operate in India.
Atomic Energy Act, 1962:
- Private Sector Participation: The changes will allow private and foreign companies to own and operate nuclear power plants, ending the government’s control over the sector.
- Public-Private Partnerships (PPPs): The amendments will encourage joint ventures between Nuclear Power Corporation of India (NPCIL) and foreign companies, allowing shared investments and expertise.
IMPACT ON AMERICAN & FRENCH FIRMS
The proposed changes are expected to have a big impact on American and French companies in the nuclear sector:
- Encouraging Investment: By easing the liability rules, the reforms are likely to attract American companies and French companies to invest in India’s nuclear energy market.
- Faster Project Execution: The reduction in legal risks could speed up the construction of projects that have been delayed, such as those in Kovvada (Andhra Pradesh) and Jaitapur (Maharashtra).
- Partnerships with foreign firms will bring advanced nuclear technologies, including Small Modular Reactors (SMRs), to India.
PREVIOUS GOVERNMENT’S STANCE
- In February 2015, the Indian government released a “Frequently Asked Questions (FAQ)” document after S. President Barack Obama’s visit.
- The document stated that there were no plans to amend the CLNDA.
- However, this stance didn’t lead to significant agreements, and the legal issues remained unresolved.
- Now, the government has reversed its position to encourage greater foreign investment.
CONCLUSION
India’s planned changes to the CLNDA and the Atomic Energy Act are a major shift in the country’s nuclear energy policy. By addressing liability concerns and promoting private sector participation, these reforms aim to attract foreign investment, particularly from American and French nuclear companies. This will help India achieve its goal of generating 100 GW of nuclear energy by 2047, strengthening energy security, and contributing to cleaner energy sources in the long term.
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