Indian Nuclear Bill Shock for U.S.

The new Indian Bill exposes firms supplying equipment to nuclear plants to liability in the case of accidents, making it difficult for U.S. players to operate in this kind of situation. The trend worldwide is that suppliers are immune from lawsuits while all liability is channeled to nuclear-plant operators.

Nuclear-energy experts say India's new law deviates from international standards of liability for power plants in accidents.

Under new India Bill the cap on liability for any nuclear accident is about $322 million. Though plant operators would be primarily responsible for accidents, they could seek "recourse" by suing suppliers.

Timothy J. Roemer, U.S. Ambassador to India said, "We are aware of the concerns of industry regarding the final version of the legislation passed by the Indian Parliament. The U.S. government is engaged with the government of India to ensure that the full potential of this historic agreement can be realized."

President Barack Obama is coming to India in November and the administration wants everything in proper shape before the visit.  State controlled nuclear-equipment companies in Russia and France will have an advantage over American companies.

But there is an escape route; one option is a government-to-government agreement that would take precedence over the law, whereby India would pledge to indemnify foreign suppliers should they be sued. 

Secondly, India could negate the effect of the law when it formally implements it. That would be akin to a presidential signing statement, in which the chief executive declares his interpretation of recently passed legislation—at times challenging the measure.

Thirdly route is to involve India's only nuclear operator, a state-run firm, signing contracts promising to take on all liability with U.S. suppliers. 

But all these measure are temporary in nature and all players want the law be amended outright so all supplier liability could be explicitly removed. But this is not going to be feasible for Congress government in center to do so amid strong opposition in New Delhi.

Energy hungry country like India is in need to diversify the energy sector and Nuclear energy is one such option. Presently Indi a generates only 3% of its electricity from nuclear energy and it plans to increase its nuclear-power capacity to 35 gigawatts from 4.5 gigawatts by 2020.