Government Moves to Amend Nuclear Liability Laws, Raising Hopes for Foreign Investment in Indian Nuclear Projects

India’s government has taken a significant step towards revitalizing major nuclear power projects by announcing amendments to its Civil Liability for Nuclear Damages Act and the Atomic Energy Act. This move is expected to clear legal hurdles for foreign nuclear power companies and facilitate their investments in India’s ambitious nuclear energy goals.

Amendments Ahead of High-Level Visits

The announcement was made in the Union Budget Speech on February 1, 2025, days before Prime Minister Narendra Modi’s visits to Paris and Washington. These amendments aim to pave the way for progress in stalled nuclear projects by French company Electricite de France (EDF) and American company Westinghouse Electric Company (WEC), whose endeavors were impeded by legal uncertainties since 2009 and 2012, respectively.

Impact on Major Nuclear Projects

The EDF’s memorandum of understanding (MoU) for building six EPR1650 reactors in Maharashtra at Jaitapur and the Westinghouse’s MoU for constructing six AP1000 reactors in Andhra Pradesh at Kovvada could now see significant progress. The amendments are also anticipated to aid India in adopting new nuclear technologies, particularly Small Modular Reactors (SMRs), which are becoming increasingly popular in developed economies.

Financial Implications and Current Capacity

Finance Minister Nirmala Sitharaman highlighted the need for at least 100 GW of nuclear energy by 2047, with an outlay of ₹20,000 crores allocated for the development of five SMRs operational by 2033. Currently, India has a nuclear power capacity of 6,780 MW across 22 reactors, with Russia’s Rosatom being the only foreign operator present in the country.

Historical Context of Legal Hurdles

In the past, Western international nuclear power companies have criticized clauses in the Civil Liability for Nuclear Damage Act (CLNDA) of 2010, which they argue mandate a disproportionately high degree of liability for suppliers of nuclear power components. These clauses, inserted in 2012, were a result of parliamentary debates following the Bhopal gas leak and the Fukushima nuclear disaster.

Expert Opinions and Recommendations

Shyam Saran, a former Foreign Secretary and PM’s Special Envoy for Nuclear Affairs and Climate Change, believes that the amendments should be done with consultation from international partners. “We still don’t know what kind of amendments the government is now planning, but it is hoped that these will be done in consultation with international partners so that we can now move ahead on projects, while ensuring the liability issue is dealt with in the contracts India signs,” he stated.

Venkatesh Verma, a former Ambassador to Russia involved in negotiations for India’s civil nuclear agreements, echoed similar sentiments. “The pragmatic way out is to bring our CLNDA on par with international conventions to ensure a clear legal standard in our domestic legislation that aligns with international standards and is applicable equally to all our international partners and domestic industry,” he added.

Government’s Shift in Policy

It’s worth noting that a decade ago, in February 2015, the government issued a Frequently Asked Questions (FAQ) memorandum stating there were “no proposals to amend the Act or the Rules.” However, this understanding did not translate into any significant contracts. The establishment of an “insurance pool” of ₹1,500 crores in 2019 to facilitate payments through reinsurance failed to secure foreign investments either.

Future Outlook

As Prime Minister Modi prepares for his meetings with French President Emmanuel Macron and U.S. President Joe Biden, the issue of nuclear liability laws remains critical. If successful, these amendments could break the deadlock and forge a breakthrough in foreign investments in Indian nuclear energy projects after two decades of negotiations.

The government’s plans to align its laws with international standards could potentially open the door to increased investment from leading nuclear power companies, facilitating a significant boost in India’s nuclear sector and energy security.

Conclusion

The amendment of the Civil Liability for Nuclear Damages Act and the Atomic Energy Act marks a positive shift in India’s nuclear policy. By addressing the legal concerns of foreign investors, the government appears committed to achieving its nuclear energy targets and positioning India as a leader in the global nuclear energy landscape.

With Prime Minister Modi’s visits to Paris and Washington, this legislative move could signal the beginning of a new era of bilateral cooperation in the energy sector. As stakeholders await more details on the proposed amendments, the coming months will be crucial in determining whether these changes can finally unlock the potential for significant foreign investment in India’s nuclear projects.

Will this legal reform bring the much-needed clarity and resolution for ongoing nuclear projects in India? Stay tuned for further developments in this exciting saga of international nuclear cooperation.

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