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Context:

Strategic potential of India-US 123 Agreement depends on legislative changes, US ‘810’ exemption, and collaboration for US-designed reactors and SMRs.  

About India-US 123 Agreement of 2007

The India-US 123 Agreement, also known as the US-India Civil Nuclear Agreement, was signed to enable full civil nuclear energy cooperation between the two countries.  

This agreement ended a 30-year ban on nuclear trade with India, which was imposed after India conducted nuclear weapons tests. 

The agreement allows India to access US nuclear technology and fuel for peaceful purposes, while also requiring India to separate its civil and military nuclear facilities and place its civil facilities under international safeguards.  

Strategic Potential of the 123 Agreement

It enables India to access advanced nuclear technology and reactors from the US, helping it meet its growing energy demands while transitioning to clean energy.

Full implementation of the 123 Agreement will deepen the strategic partnership between India and the US, especially in the energy and technology sectors.  

The agreement will open opportunities for US companies like Westinghouse, GE-Hitachi, and Holtec International to invest in India’s nuclear sector.

India aims to become a global leader in Small Modular Reactors (SMRs) technology, leveraging it as part of its clean energy transition and as a foreign policy tool to export nuclear technology to other countries.

Unfinished Legislative Agenda

India needs to amend two key laws to facilitate the full implementation of the 123 Agreement:

Atomic Energy Act, 1962

• The proposed amendments aim to allow private sector participation in nuclear power plant operations and SMR development.
• Currently, only state-owned entities like the Nuclear Power Corporation of India Ltd (NPCIL) and its joint ventures are permitted to operate nuclear plants.
• Opening the sector to private players will attract investment and accelerate the deployment of nuclear energy projects.

Civil Liability for Nuclear Damage Act (CLNDA), 2010

• The CLNDA was enacted to create a compensation mechanism for victims in case of a nuclear accident and to allocate liability among operators and suppliers.
• Foreign vendors like GE-Hitachi, Westinghouse, and Framatome have raised concerns about the law, as it channels liability to equipment suppliers, deterring their investment in India.
• Amendments to the CLNDA are expected to address these concerns and make the liability framework more attractive to foreign companies.

US Legislative Hurdles

India is seeking an exemption from a restrictive US provision known as the ‘810 Authorization’:

• This provision restricts US companies from manufacturing nuclear equipment or performing nuclear design work outside the US.
• It has been a major roadblock for India’s SMR ambitions, as India wants to co-produce nuclear components domestically.
• An exception to the 810 Authorization is crucial for enabling US companies to collaborate with Indian firms in manufacturing and deploying SMRs in India.

Progress and Challenges

The Indian government has committed to amending the Atomic Energy Act and CLNDA, but passing these amendments in Parliament could be challenging. The US has sought a firm commitment from India to amend the liability law, but New Delhi has so far offered only assurances.

The Biden administration had initiated work on granting an 810 Authorization to Holtec International, a US-based company exploring SMR collaborations with India. However, limited time and procedural delays have slowed progress. The new administration is expected to take this forward.

Conclusion

The full realisation of the India-US 123 Civil Nuclear Agreement depends on legislative changes in both countries. India must amend its Atomic Energy Act and CLNDA to attract foreign investment and enable private sector participation, while the US must grant an exception to the 810 Authorization to allow US companies to collaborate with India on SMRs and nuclear technology.

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THE U.S.-INDIA CIVIL NUCLEAR DEAL: CHALLENGES, OPPORTUNITIES

ABOUT INDO-US NUCLEAR COLLABORATION: UPSC CURRENT AFFAIRS

Source: 

INDIANEXPRESS

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