Source: Swadeshi

Context

India is considering amending the Civil Liability for Nuclear Damage Act (CLNDA) of 2010 and the Atomic Energy Act (AEA) of 1962 to allow private businesses to build and operate nuclear power plants.

About: 

• India's clean energy transition ambitions and net-zero commitments require increasing non-fossil energy sources, including nuclear.
• The Civil Accountability for Nuclear Damage Act, 2010 (CLNDA) imposes accountability on providers, discouraging foreign investment.
• The issue centres on whether altering this law is required or if the difficulties are deeper and more systemic.

Legal Reforms Underway

• Legal reforms are underway to ease nuclear liability laws (Civil Liability for Nuclear Damage Act, 2010). Its goal is to reduce the liability of equipment vendors in the event of a nuclear accident. Key Proposed Changes:
• Monetary Cap: The liability may be limited to the original contract amount.
• Time Limit: Establish a statute of limitations for how long liability is applicable.
• The purpose of this amendment to the Atomic Energy Act of 1962 is to allow private and foreign players to enter the nuclear power generation industry.
• Currently, only state-owned businesses such as NPCIL and NTPC Ltd can operate nuclear facilities.
• Proposed Change: Allow foreign/private organizations to participate in prospective projects as minority equity holders.

Why Amend India’s Nuclear Energy Laws?

To Attract Private and Foreign Participation

• The Civil Liability for Nuclear Damage Act (CLNDA), 2010 includes strict liability provisions, discouraging foreign firms from investing.
  
  
• Companies like Westinghouse (U.S.), Électricité de France (EDF), and Rosatom (Russia) have cited the law as a barrier to entry.
  
  
• The 2008 U.S.-India nuclear deal envisioned foreign participation, which has been obstructed by the current legal framework.
  
  

To Meet Clean Energy Targets

• India aims to expand nuclear capacity from 8 GW to 100 GW by 2047 to support its low-carbon energy goals.
  
  
• Achieving this scale requires foreign investment and technological support, as domestic capabilities are insufficient.
  
  

Arguments in Favour of the Proposed Amendment

Ambitious Nuclear Energy Expansion

• The target of 100 GW by 2047 underlines India’s commitment to diversifying its energy mix and reducing emissions.
  
  
• Legal reforms are necessary to unlock foreign partnerships and investment to meet this ambitious target.

Current Legal Hurdles

• The 2010 Act bars private indemnity contracts, blocking standard global practices of liability sharing.
  
  
• France, Japan, and U.S. companies have raised concerns over liability laws, limiting their engagement.
  
  
• Rosatom, despite being a state entity, also initially required contractual indemnity.
  
  

Impact on Domestic Supply

• Post-2010, Indian vendors began refusing to supply components due to liability fears, notably affecting projects like Kovvada.
  
  
• This has disrupted the domestic nuclear supply chain and delayed project execution.
  
  

NPCIL’s Legal Workaround

• NPCIL attempted to waive supplier liability by asserting that failures would be due to NPCIL’s own specifications.
  
  
• However, this argument is legally untested, adding uncertainty and risk to projects.
  
  

Arguments Against the Proposed Amendment

Faulty Investment Assumption

• The claim that investment is the bottleneck is questioned—most nuclear supplier nations have not expanded capacity at India’s proposed pace.
  
  
• Only China has scaled up rapidly, but Chinese investment in India is not viable due to strategic concerns.

Political and Strategic Pressure

• There is strong U.S. lobbying to amend the liability law, driven by strategic and commercial motives.

Capacity and National Security Concerns

• India currently has limited supply-side capacity for large-scale nuclear expansion.
  
  
• Allowing private firms in the nuclear sector, especially involving Small Modular Reactors (SMRs), raises national security concerns.

Technology Transfer Issues

Profit-Driven Transfer Policies

• Private companies base technology transfer decisions on commercial profitability, not diplomatic relationships.
  
  
• The Westinghouse-China AP1000 case shows how export controls can limit actual transfer of core technologies.

Limited Precedents

• Even Rosatom did not fully transfer technology to India — while India built subcomponents, critical "hot section" control remained with Russia.

Cautious Optimism on SMRs

• Some SMR firms may be more open to tech transfer to gain market access and increase profitability.
  
  
• However, SMRs are untested in India, and past experiences suggest core technology may still be withheld.

Defence Sector Analogy

• Despite raising FDI in defence from 25% to 100%, India did not receive major technology transfers — raising doubts about nuclear sector outcomes.
  
  

India’s Domestic Nuclear Path Forward

• India is investing in 5 Small Modular Reactors using its own Pressurised Heavy Water Reactor (PHWR) technology.
  
  
• Emphasis should be placed on scaling indigenous capabilities rather than over-relying on uncertain foreign participation.

How will the amendments help achieve 100 GW capacity?

• Foreign Participation: Amendments will remove liability-related barriers, allowing multinational corporations to invest and offer technology. For example, Westinghouse (US) and EDF (France) may enter Indian projects if liability criteria are in line with international standards.
• Increasing Domestic Private Sector Involvement: Changes to rules such as the Atomic Energy Act may allow Indian private enterprises to build and operate reactors. For example, companies such as L&T and BHEL may contribute to large-scale infrastructure and component manufacturing.
• Attracting Investment in Advanced Reactors (SMRs): Legal clarity could attract money and collaborations in Small Modular Reactors, allowing for rapid capacity expansion. For example, new-age enterprises working on SMRs may consider partnering with India if they are assured of returns and limited responsibility.

What is a Small Modular Reactor (SMR)?  Small Modular Reactors (SMRs) are modular nuclear power reactors that may generate up to 300 MW of electricity and are manufactured in factories for ease of travel and installation. They use modern, safer designs with features such as passive cooling, making them appropriate for isolated places, industrial applications, and integration with renewable energy sources.

Practice Question Q. With growing energy needs should India keep on expanding its nuclear energy programme? Discuss the facts and fears associated with nuclear energy.