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Context:

Government to amend its nuclear liability and atomic energy laws to ease supplier liability rules and allow private players, boosting foreign investment.

About India’s Civil Nuclear Sector

India’s civil nuclear sector focuses on using nuclear energy for electricity, currently contributing 8.7 GW through 22 reactors operated by the state-owned Nuclear Power Corporation of India Limited (NPCIL).

Historically, only public sector companies like NPCIL or NTPC could operate nuclear plants, and strict laws limited private and foreign involvement. Now, the government plans to amend laws to allow private companies and attract foreign investment to meet rising energy demands and climate goals.

Why Are These Reforms Important?

The reforms aim to expand nuclear capacity to 100 GW by 2047, support India’s net-zero ambitions, and revive projects stalled since the 2008 Indo-US nuclear deal. By easing legal barriers, India hopes to attract companies like Westinghouse (US) and EDF (France) and boost domestic firms like Larsen & Toubro (L&T).

In the 2025 Union Budget, Finance Minister Nirmala Sitharaman announced amendments to the Atomic Energy Act and CLNDA, with Rs 20,000 crore allocated for Small Modular Reactors (SMRs) to be operational by 2033. These changes address investor concerns and align India with global nuclear liability standards.

About Atomic Energy Act 1962

Governs the development, control, and use of nuclear energy in India.

Restricts nuclear plant operations to public sector entities like NPCIL.

Prohibits foreign direct investment (FDI) in nuclear operations, though equipment supply is allowed.

Proposed Amendments to the Atomic Energy Act 1962

Current Restriction => Only public sector entities can operate nuclear plants, limiting private and foreign roles.

Proposed Changes:

• Allow private companies to operate nuclear plants, potentially with foreign minority stakes.
• Enable public-private partnerships (PPPs), with 50% of the 100 GW target expected from PPPs.  
• Support SMR development, with Indian firms like L&T approved for US SMR technology transfers.

Open the sector to companies like Reliance, Tata Power, and Adani Power, which have shown interest in investing $5.14 billion eac.

Civil Liability for Nuclear Damage Act, 2010 (CLNDA)

Ensures quick compensation for victims of nuclear accidents through a no-fault liability system.

Caps operator liability at Rs 1,500 crore, with the government covering excess up to Rs 2,300 crore.

Allows operators to seek recourse from suppliers for defective equipment or services, causing concerns for investors.

Proposed Amendments to the CLNDA

Key Issue: Supplier Liability

• Section 17(b) allows operators (e.g., NPCIL) to seek compensation from suppliers for accidents caused by defective equipment or services.
• This contrasts with the Convention on Supplementary Compensation (CSC) for Nuclear Damage places liability, which places liability only on operators, deterring foreign and domestic suppliers.

Proposed Changes:

• Dilute Section 17(b): Reduce supplier liability to align with global standards, where operators bear primary responsibility.
• Cap Liability: Limit supplier compensation to the contract value and set a time limit for claims, reducing open-ended risks.
• Clarify Supplier Definition: Define “supplier” to exclude sub-suppliers (e.g., small vendors providing minor components), addressing concerns from Indian firms like Walchandnagar Industries.

The Atomic Energy Regulatory Board (AERB) will ensure contracts explicitly address recourse, maintaining safety standards.

Alignment with International Standards

Convention on Supplementary Compensation (CSC) => India signed the CSC in 2010 and ratified it in 2016, but CLNDA’s supplier liability clauses conflict with CSC’s operator-only liability model. Amendments will align CLNDA with CSC, making India more attractive to foreign investors.

• Most countries (e.g., under the 1960 Paris or 1963 Vienna Conventions) limit liability to operators, encouraging investment. India’s unique supplier liability stems from the 1984 Bhopal gas tragedy, emphasizing corporate accountability.  

Impact of Reforms on Nuclear Sector

Revival of Stalled Projects => The amendments are critical to moving forward on long-delayed projects, notably the proposal for six reactors with French collaboration in Jaitapur, Maharashtra, and another six with US collaboration in Kovvada, Andhra Pradesh.

Private Sector Participation => The government expects the private sector to contribute significantly, potentially up to 50% of the 100 GW target. Major Indian conglomerates have expressed interest. The Bharatiya Saksham Reactor (BSR) program has also been launched to allow private firms to build reactors for captive use.

Strengthening the Indo-US Nuclear Deal => In a significant move in March 2025, the US Department of Energy cleared the transfer of SMR technology to Indian companies. This has put the onus on India to complete its legislative reforms to fully leverage the commercial potential of the Indo-US civil nuclear agreement.

Must Read Articles: 

U.S.-India Civil Nuclear Deal 

Indo-US Nuclear Collaboration 

Source: 

INDIAN EXPRESS