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Liability law puts India's nuclear future in doubt

Discussion in 'Indian Military Doctrine' started by Osiris, Sep 15, 2010.

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  1. Osiris

    Osiris Major SENIOR MEMBER

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    American firms hoping to get a piece of India's expected $150 billion nuclear energy market over the next two decades got a rude shock Sept 1.

    Instead of an open door to hundreds of billions in trade deals, with the passage of a divisive liability law, India's parliament imposed harsh liability measures on both suppliers and operators of any new nuclear plants.

    The law goes beyond international rules that limit liability to operators of the plants. It effectively stops any American firm from selling nuclear reactors, fuel, or components to India. This may have been the opposition party's goal all along which used the Bhopal tragedy as a poster child for their cause. The new law has created a huge headache for both countries.

    The U.S. India Business Council, composed of hundreds of U.S. firms that could be affected by the new law, took the unusual step of issuing a protest. It said in a statement that the sole remedy for compensation from accidents should be with Indian operators.

    What were you thinking?

    American firms aren't the only ones upset with the new law. Russia, which is building four new reactors for India, demanded a "clarification" from India. This is diplomatic speak for "what were you thinking?"

    Russian Ambassador to India, Alexander M. Kadakin, told the Times of India Sept 15, that the liability law is being looked on as a "deterrent" for suppliers to sell into the Indian nuclear market.

    Areva, the French state-owned nuclear giant, also weighed in on the liability law. According to a report in Platts Sept 7, French President Nickolas Sarkozy is expects to bring up the issue on a state visit to India in December.

    Areva spokesperson Pauline Briand told Platts her firm "does not consider the clause to be good news," and she noted that the Nuclear Power Corporation of India Ltd (NPCIL) has also criticized the measure.

    NPCIL is worried the law will cut off the supply of western components for the 30-40 GWe of new nuclear generation capacity the country wants to build in the next two decades. If that happens, India's ambitious plans to build new reactors will quickly come to an end.

    The Wall Street Journal reported Sept 9 the new law has U.S. and Indian diplomats "scrambling" to fix the situation prior to a November visit to New Delhi by President Obama prior to the G20 summit in Seoul, South Korea Nov 11-12.

    The newspaper says U.S. diplomats and companies planning to do business in India were "caught by surprise." This report is difficult to accept since anyone following the history of the measure could see the opposition position coming a mile away. This is the third time PM Singh tried to pass the law having failed previously twice before to pass the bill.

    What to do about bill?

    Efforts to mitigate the impact of the law on American firms could take one of three paths.

    * Option 1: India pledges to indemnify foreign suppliers through government-to-government agreements.
    * Option 2. PM Singh sets aside the supplier provision via the equivalent of an executive order.
    * Option 3: NPCIL assumes the liability as the supplier since it is India's only operator of nuclear plants. Private investment in nuclear reactors is not allowed under Indian law.

    Efforts to diminish the effect of the law would likely set off a firestorm among opposition groups. To see how hard over they are about the supplier provision, consider this statement to the WSJ by Ravi Prasad, spokesman for the main opposition party.

    "India is a huge market. Come on my terms or not at all."

    His problem is that his party is not in power, and has no executive ability to enforce the law.

    Nonproliferation group has ideas that are non-starters

    ImageNot everyone in the U.S. nuclear world is unhappy with India's tough new law. Henry Sokolski, head of a nonproliferation think tank in Washington, DC, (right) wrote a Sept 13 Op Ed in the WSJ. He said the US. needs to concentrate on trade issues and not new nukes.

    Sokolinski said efforts by PM Singh to gut the liability law could "poison" U.S. relations with India and would make President Obama look like he was carrying water for the nation's nuclear component manufacturers.

    Actually, that second thought is on the mark. Sokolski got some other things right, but in several cases, imposed his own idealistic worldview on two countries that probably don't agree with them.

    What he got right is that India doesn't need American firms to build out its nuclear energy infrastructure. Russia has four reactors under construction there. France has two more with plans to build six. Both countries operate through state-owned corporations that self-insure through sovereign immunity. Good luck suing either one if there is a problem. American firms are already behind in gaining market share for India's nuclear new build.

    What he gets wrong is a claim that what India really needs is "energy efficiency." This is a blind spot that affects green groups and now appears to have moved to the nonproliferation community. India needs growth, and to get it, needs electricity. For instance, in late August the state-owned railway system started talking about having its own nuclear reactor so it can electrify the country's train system. India needs the baseload power that comes from nuclear reactors to stabilize its shaky electric grid.

    Also, Sokolski gets wrong the view that Indian can supply its own fast reactors to replace the ones the country wouldn't get from the U.S. That technology is decades out in the futrue along with India's continued exploration of Thorium fueled reactors. India doesn't have the manufacturing capability to build either design in the near term. And there is no way India will import reactors from China which is supplying them to Pakistan.

    Obama is coming

    ImageWhat’s driving the need to resolve the nuclear liability issue is that President Obama is coming to India in November. Neither the U.S. State Department nor India's foreign policy establishment want the nuclear liability issue as a distraction.

    The diplomatic trap lines are being worked at both ends. In Sept 8, U.S. Ambassador to India Timothy Roemer met with Indian national security advisor Shiv Shankar Menon to express U.S. concerns. That's a repeat of the U.S. India Business Council's question, "What were you thinking?"

    In the U.S. India's foreign minister Nitrupana Rao arrived this week to meet with U.S. Undersecretary of State William Burns and other senior officials to finalize the agenda for Obama's visit. One of India's desires coming out of Obama's visit is support for a permanent seat on the U.N. Security Council. There are also a host of defense and trade issues to be worked out.

    The nuclear liability law looms large because the U.S. supported India's return to being able to buy nuclear fuel as part of an implied promise that U.S. firms would be able to supply the fuel, and reactors. That hasn't happened and U.S. firms have become more vocal about it.

    John Rice, head of G.E., which has plans to build six 1,500 MW ESBWR reactors for India, told the WSJ flatly he's not going to do the deals if the law stays on the books.

    "We're not going to do business in countries where the nuclear liability regime is not well-defined."

    Right now the situation has the potential to cause political problems between the two counties. These are problems that PM Singh has inherited from his own political system. Whether he'll accept any of the options to resolve it remains to be seen.

    Liability law puts India's nuclear future in doubt | The Energy Collective
     
    Last edited: Sep 15, 2010
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  2. yogi

    yogi REGISTERED

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    I am very much interested in knowing the nuclear liability norms of USA, E.U and other so called developed nations?? Please can any body help me in that?
    Because USA is asking a huge amt. from British pet. for OIL lick where casualty of life and economy is very less in comparison to any nuclear mishap (if happened any time in future)
    If we dilute the clauses it's not like we r telling the world that life of ours r very less valuable is compare to US or EU citizens.

    And the last point i am hearing "the OBAMA Coming" thing from last few months why their is so much hype for his visit. It's ok that he is the leader of world most powerful country but why we r bending like we r a colony of USA. (MMCRA deal, Nuclear liability Bill, etc.)
     
  3. prototype

    prototype Major SENIOR MEMBER

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    definitely the bill is going to hamper Indian nuclear business,Both NPCIL(India's sole operator) and BHEL(India's sole supplier) r worried about it

    An 80 yr liability clause is really a big issue,its good that it will ward of another Bhopal but at the cost of huge business and development
     
  4. Osiris

    Osiris Major SENIOR MEMBER

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    US presses India to further water down nuclear liability law

    The US nuclear industry and the Obama administration are pressing the Indian government to amend or circumvent the controversial Civil Liability for Nuclear Damage law that was passed by India’s parliament in late August.

    “We are not going to chase bad deals,†declares John Rice, General Electric’s head of infrastructure-technology businesses. “And we’re not going to do business in countries where the nuclear-liability regime is not well-defined.â€

    The US-India Business Council, a mouthpiece for US big business and their Indian allies, has also criticized the Indian law. It argues that by failing to exempt nuclear industry suppliers from legal liability and lawsuits in the event of accidents, the law could “preclude involvement by the private sector—both Indian and foreign—and stymie India’s multi-year effort to develop civil nuclear power.â€

    US State Department spokesperson P. J. Crowley and the US Ambassador to India, Timothy J. Roemer, have publicly declared that Washington is pressing India’s Congress Party-led coalition government to have the new law amended. Said Crowley, “We continue our discussions with the Indian government on this issue and we note that Indian business leaders are concerned about some specific aspects of the law that was just passed by Parliament. We will look to the Indian government to see what changes can be made.â€

    Roemer said the Obama administration is “aware of the concerns of industry regarding the final version of the legislation … The US government is engaged with the government of India to ensure that the potential of [the] historic [Indo-US civil nuclear] agreement can be realized.â€

    The Wall Street Journal is reporting that Washington, recognizing the difficulty of the government sending a freshly minted law back to parliament for amendment, is seeking to make a government-to-government agreement with India that could take precedence over it.

    In other words, the self-proclaimed “world’s two largest democracies†are conspiring to find a mechanism to circumvent the nuclear liability regime just fashioned by India’s parliament so as to please GE and other US and Indian companies that hope to profit from India’s plans to rapidly expand nuclear power.

    The focus of the complaints is the law’s Clause 17 (b). It states that the “operator†of a nuclear installation, after paying compensation for any damages caused by a nuclear accident, has the right to sue and obtain compensation from a supplying company if “the nuclear incident has resulted as a consequence of an act of the supplier or his employee, which includes supply of equipment or material with patent or latent defects or substandard services.â€

    US nuclear companies claim this clause will force them to pay exorbitant liability insurance fees and will put them at a huge competitive disadvantage with French and Russian nuclear companies, who have access to cheaper state-sponsored insurance.

    Russia has seconded the US complaints and is seeking “official clarification†as to the implications of Clause 17 (b). The Russian ambassador to India, Alexander M. Kadakin, told the Times of India, “One should not shift solution-finding to the shoulders of partners in the nuclear sphere, including Russia, who are sincerely ready to help India.â€

    Indian Prime Minister Manmohan Singh has responded to the criticisms of the new law by saying that if US and other foreign nuclear companies “make a lot of money, they will forget some of the concerns they have expressed.â€

    But he and his government have clearly been taken aback by the US reaction, which has included articles in the New York Times and other major US dailies expressing great disappointment over the law and more broadly concern over whether the Indo-US civil nuclear accord, from which it arose, is paying Washington sufficient dividends.

    On the US’s part, the passage of a civil nuclear liability bill protecting US companies from large damage claims was essential for the operationalisation of the civil nuclear treaty that India and the United States hammered out in 2008.

    Washington conceives of the treaty and associated military cooperation and arms deals as a means of cementing an Indo-US “global, strategic partnership†that would tie India to US strategic objectives, especially in countering a rising China, extending US influence in oil-rich Central Asia, and isolating Iran.

    US business, for its part, calculated that the lifting of the embargo on nuclear trade with India would pave the way for hundreds of billions of dollars worth of Indian contracts to buy US civilian nuclear reactors, armaments, and hitherto restricted military-security technology.

    India’s corporate elite and most of its strategic, nuclear and military establishment strongly endorsed the Indo-US nuclear treaty. This is because they believe it goes a long way to recognizing India as a nuclear-weapons state and granting India the “world power†status they covet, gives India access to much-needed advanced nuclear, military and other technology, and will allow India to concentrate the resources of its indigenous nuclear program on developing its nuclear-weapons arsenal.

    Manmohan Singh went to great lengths to overcome opposition to the Indo-US nuclear accord. At one point he threatened to resign as prime minister if the Congress Party leadership did not allow him to move it forward and in July 2008 he called the dare of the Stalinist-led Left Front, bringing the accord before parliament even though the Stalinists had vowed to withdraw support for the government and thereby jeopardize its parliamentary majority.

    Singh was similarly behind the push to secure passage of the liability law prior to a summit meeting with US President Barack Obama in New Delhi this November.

    The initial drafts of the liability law gave US and Indian big business everything they were after and more.

    Indeed, so weak was the proposed law—it proposed maximum financial liability for the operator of a nuclear facility at around $110 million, or 23 times less than the legal liability of an operator in the US—that it provoked a political uproar.

    Adding to the government’s difficulties was that the discussion of the nuclear liability law coincided with the renewed pubic interest in, and outrage over, the 1984 Bhopal Union Carbide disaster. This interest and outrage was occasioned by last December’s 25th anniversary of the world’s worst-ever industrial accident and by the first criminal convictions of Union Carbide executives this June. (See “India: Bhopal verdict provokes public outrageâ€)

    The Bhopal disaster killed as many as 30,000 people and has left tens of thousands of others blind or otherwise permanently damaged; yet under a 1989 settlement the company paid the Indian government just $470 million, a fraction of its profits in any given year.

    Critics of the nuclear liability law—environmental groups, other NGOs and some opposition politicians—warned that the government, in its anxiety to placate the nuclear industry and Washington, was creating conditions for a Bhopal-type scenario in which a giant corporation through negligence commits mass murder, then escapes any meaningful sanction.

    Under public and opposition pressure, the government ultimately agreed to increase the cap on liability to 15 billion rupees, or about $335 million, still a very small amount and substantially less than the Bhopal settlement.

    During the debate over the bill, the government also stipulated that all civilian nuclear plants will continue to be legally “operated†by the Indian government, even if they are designed, built, and serviced by foreign companies.

    This makes Clause 17 (b)’s rules governing “suppliers†all the more important.

    In the final stages of the debate on the bill, India’s Congress Party led United Progressive Alliance (UPA) coalition government sought, unsuccessfully, to smuggle new language into Clause 17 (b) that would have required the government to prove an “intent†to cause an accident in making liability claims. Critics rightly charge this would have rendered the liability clause meaningless, by raising the liability bar from negligence to something deliberate, i.e. more akin to terrorism.

    With the withdrawal of the “intent clause†and the tripling of the liability limit to 15 billion rupees, India’s official opposition, the Hindu supremacist Bharatiya Janata Party (BJP), announced it would vote for the bill.

    Since falling from power in 2004, the BJP has generally adopted a provocative stance toward the minority UPA government, raking up communal issues in an attempt to destabilize it and refusing to support measures such as the Indo-US nuclear treaty that it had previously advocated. This has been severely criticized by broad sections of the corporate media who believe that the BJP, as the Indian elite’s alternate party of government, should cooperate in passing legislation considered vital to the interests of the bourgeoisie.

    Following passage of the nuclear liability law, Manmohan Singh was effusive in his praise of the BJP, noting that it was the former BJP-led National Democratic Alliance (NDA) government that initiated the negotiations with Washington to end the Nuclear Non-Proliferation Treaty-mandated embargo on civilian nuclear trade with India.

    But US big business, the Obama administration, and much of India’s corporate elite deem the modest concessions the UPA government made to secure passage of the liability law to be excessive. They wanted and want legislation that gives nuclear suppliers iron-clad guarantees against all liability claims.

    US presses India to further water down nuclear liability law
     
  5. Osiris

    Osiris Major SENIOR MEMBER

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    U.S. Looks For Solution With India Over Nuclear Liability

    The United States said yesterday it hopes to resolve differences with India on newly passed nuclear liability regulations intended to pave the way for full implementation of the countries' 2008 atomic trade agreement, Agence France-Presse reported (see GSN, Sept. 8).

    U.S. Secretary of State Hillary Clinton discussed the matter with her Indian counterpart, S.M. Krishna, at the U.N. General Assembly conference in New York. The meeting was part of efforts to prepare for President Barack Obama's trip in November to the South Asian nation.

    The Civil Liability for Nuclear Damage Bill limits nuclear reactor operator liability following an atomic disaster to roughly $320 million and allows lawsuits against suppliers of nuclear materials, technology and services -- something that goes against international norms. Business groups have said the law would discourage foreign investment in India's burgeoning atomic power sector.

    "We've taken note of some of the concerns that industry representatives have raised about some of the provisions of the liability bill and that the bill may possibly be inconsistent with international standards," U.S. Assistant Secretary of State Robert Blake said to journalists.

    "We look forward to working with the Indian government to work our way through this and arrive at a solution where American industry can contribute to India's ambitious civil nuclear energy needs," he said.

    The 2008 nuclear trade deal ended years of international atomic isolation imposed on India, a nuclear-armed nation that refuses to sign the Nuclear Nonproliferation Treaty. As part of the agreement, India opened its nonmilitary nuclear sites to international inspections (Agence France-Presse/Google News, Sept. 27).

    Meanwhile, Indian Defense Minister A.K. Antony criticized U.S. regulations against the export of domestically produced military technology to blackballed Indian organizations as a "matter of concern" and said Washington should end the practice, the Washington Times reported today.

    The U.S. Commerce Department's Industry and Security Bureau publishes the Entity List which lists organizations that have taken part in activities that increase the likelihood of the appropriation of exported equipment to WMD programs. The Indian Defense Research and Development Organization, the Atomic Energy Department and the Indian Space Research Organization all contain blacklisted agencies.

    The Indian organizations were placed on the Entity List following the South Asian nation's 1998 nuclear tests.

    In the past, U.S. trade restrictions have been a thorn in Washington-New Delhi relations but the issue has become much less of a sticking point over the last five years, said Center for Strategic and International Studies Asia Program Director Teresita Schaffer.

    "I believe it ought to be possible to remove many of the institutions that are now on the entities list, and I hope this happens," Schaffer said. "The United States has already decided to permit civilian nuclear trade with India in spite of India's having nuclear weapons; the logic of that decision ought to permit most of the 'entities' to be removed" (Ashish Kumar Sen, Washington Times, Sept. 28).

    NTI: Global Security Newswire - U.S. Looks For Solution With India Over Nuclear Liability
     
  6. True_Indian

    True_Indian 2nd Lieutant FULL MEMBER

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    We already compromised too much..let the US companies come if they want or else we can do business with rest of the world.
     
  7. Capt.Popeye

    Capt.Popeye Captain SENIOR MEMBER

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    The picture is not quite so bleak. Unfortunately, US businesses thought that after the leading role played by GoUSA in brokering the nuclear deal, they would have the field all to themselves. Firstly, it did not work out that way, India was quick to tie-up deals with other countries viz. Russia, France, Canada and so on. Then the question of liability could not be left open-ended. Hence the Liability Legislation. Now US suppliers will have to take increased liability cover from their underwriters and factor in the costs, or take their business elsewhere. For all their griping, they will have to consider falling in line. There is a huge cake on the table.
     
  8. Osiris

    Osiris Major SENIOR MEMBER

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    Law firms hired to allay US fears on N-liability bill

    MUMBAI: Ahead of US President Barack Obama’s visit to India next month, the Nuclear Power Corporation (NPC) has engaged law firms to allay fears and apprehension of the US about the N-liability bill.

    Ever since the bill was passed, the US administration has been pressing India to make certain modifications, particularly about certain aspects of unlimited liability. But, India is not keen on making any changes.

    NPC’s director (finance) Jagdeep Ghai said the French and Russians (who have signed the bilateral civil nuclear agreement) have no issues with the bill.

    “The Americans should not have any fears either. The US laws are, however, different,†he acknowledged. Sources in NPC told TOI that the N-liability bill could be an important part of the agenda of talks between President Obama and PM Manmohan Singh.

    The Department of Atomic Energy (DAE) is drafting rules for the bill which must be ready by November 9 when the winter session of Parliament begins, said Ghai. There are two types of liabilities, he said. One relates to Indian manufacturers. NPC plays a key role in the manufacturing process of atomic components. About foreign reactors, it’s a different proposition, he said.

    Since NPC has Rs 12,000 crore surplus, it will firm up financial security and build a fund. This will permit NPC to show it is not cashstarved. NPC, however, will take insurance cover for the conventional section of nuclear plants such as turbine generators.

    About the import of US-made nuclear reactors from GE and Westinghouse, Ghai said technical discussions are yet to begin. “Maybe this could be discussed during President Obama’s visit,†Ghai said. After a gap of two years, the Indian nuclear industry showed an “upward trendâ€.

    Nuclear power generation between April and September 2010 was 23% higher than in the corresponding period last year.

    Law firms hired to allay US fears on N-liability bill - The Economic Times
     
  9. Osiris

    Osiris Major SENIOR MEMBER

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    US worries on n-liability bill allayed, says Krishna

    New Delhi, Oct 15 (IANS) India has allayed the US’ “misapprehensions†about the civil nuclear liability bill, and has assured it that the legislation was aimed at providing a level playing field for doing nuclear business with New Delhi.

    “There were some misapprehensions when the nuclear bill was passed. I had discussions with US Secretary (of State) Hillary Clinton over the phone and subsequently in New York about it,†External Affairs Minister S.M. Krishna told journalists here Friday.

    Krishna stressed that he assured Clinton that the legislation, which fixes the liability of operator in case of a nuclear accident, was passed not with any country in mind, including the US.

    “The whole context was to provide a level playing field to all those who want to do nuclear business with India,†said Krishna, weeks ahead of US President Barack Obama’s visit to India, likely early November.

    Issues relating to the nuclear liability bill are expected to figure in discussions between Prime Minister Manmohan Singh and Obama.

    Krishna’s comments came amid unhappiness in Washington over some aspects of the legislation, especially the sections dealing with suppliers’ liability.

    Krishna also said that India will address doubts about its stand on the Convention on Supplementary Compensation and clarified that the nuclear liability legislation was not at variance with the CSC, which provides a global framework to deal with additional compensation in the event of an accident in a nuclear power plant.

    “We have an open and positive attitude towards India joining the CSC,†said Foreign Secretary Nirupama Rao, who was also present at the interaction with media persons.

    Some of US nuclear companies, that had played an important role in the passage of the historic 2008 Indo-US civilian nuclear deal, have warned that they are unlikely to start nuclear trade with India unless New Delhi becomes a party to the CSC, according to a US Congressional report.

    US worries on n-liability bill allayed, says Krishna
     
  10. Osiris

    Osiris Major SENIOR MEMBER

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    India resists U.S. pushback on nuclear liability

    NEW DELHI: After initially trying to dilute the nuclear liability law at the draft stage to accommodate the concerns of American suppliers, the Manmohan Singh government has told the United States that the Act, as passed by Parliament, is final and that no changes in any of its provisions are possible.

    In particular, the Indian side insists that any rules the government might frame to guide the Act's implementation cannot override its provisions, including Section 17(b), which gives Indian operators a ‘right of recourse' against nuclear suppliers in the event of an accident caused by defective equipment.

    No voluntary surrender

    Indian officials also insist that operators will not be able to “voluntarily surrender†their rights under 17 (b) in any commercial contract signed with foreign reactor suppliers, as allowed, for example, by the nuclear law of South Korea.

    In the run-up to President Barack Obama's visit here in November, the U.S. side is looking for substantive changes in the nuclear liability law. American officials, including Under Secretary of State for Political Affairs William J. Burns, who is currently visiting Delhi, have told their counterparts here that the law is out of step with the international Convention on Supplementary Compensation for Nuclear Damage (CSC) — a compact India said it would sign in 2008.

    “As far as we are concerned, our law is fully compatible with the CSC, and there is no question of our blinking,†a senior Indian official told The Hindu. “We said we would sign the CSC and our intention is still to do so. But nowhere does the CSC say it will supersede existing national legal remedies such as torts.â€

    Last month, a delegation from the Department of Atomic Energy met with officials at the International Atomic Energy Agency in Vienna — which serves as the ‘depository' of the CSC — to convey India's intention of acceding to the treaty.

    The IAEA's role is limited to accepting a country's accession to the CSC. Indian officials say it cannot and will not scrutinise or pass judgment on the national liability law of the acceding state. But the IAEA's Office of Legal Affairs apparently did tell the Indian side that lawyers from General Electric and other U.S. nuclear suppliers had told them that the Indian Act was “incompatible†with the CSC.

    American companies such as GE and Westinghouse insist they will be unable to supply nuclear equipment to India unless they are fully insulated from all liability claims in the event of an accident. U.S. officials have also latched on to the criticism Indian companies have made of the new liability law, arguing that it is not just U.S. companies which fear being exposed to “unlimited liability†in the event of an accident.

    Under one of the rules the government is proposing to introduce, however, this “alliance†between the Indian corporate sector and American nuclear vendors is likely to fracture.

    Apart from the reactor itself, a typical nuclear power plant sources major and minor components from dozens of companies, and many of the latter fear being taken to court in the event of an accident. One option being examined is to define the “supplier†in 17(b) in such a way as to insulate these ‘nuts and bolts' companies from liability. “But there is no way the reactor supplier can be taken out of the definition,†a senior Indian official told The Hindu.

    The Hindu : Front Page : India resists U.S. pushback on nuclear liability
     
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