Paving the way for trade negotiations? India plans to relax its nuclear liability law to attract American companies.

Three government officials said that India is planning to relax its nuclear liability laws to limit accident-related penalties for equipment suppliers, mainly in order to attract American companies. This latest move by Prime Minister Modi's government is aimed at increasing nuclear power capacity to 100 GW by 2047, while also paving the way for trade and tariff negotiations with the United States. The government of India will remove a key provision in the nuclear liability law that holds suppliers liable for accidents and sets a cap on fines for nuclear accident-related equipment suppliers. Debasish Mishra, Chief Growth Officer of Deloitte South Asia, said, "India needs nuclear power, it is green and indispensable. Limited liability will alleviate the main concerns of nuclear reactor suppliers." These revisions align with international norms, placing the responsibility for maintaining the safety of nuclear reactors on operators rather than on reactor suppliers. The Indian government hopes that these changes will alleviate concerns of US-based companies such as GE Aerospace (GE.US) and Westinghouse Electric Co., who have been hesitant for years because their liability is unlimited in the event of an accident. Under the proposed amendment, the right of operators to seek compensation from suppliers in the event of an accident will be limited to the value of the contract. It will also be subject to the time limits specified in the contract. Currently, the law does not specify a limit on the amount of compensation operators can seek from suppliers, nor does it specify the time limit within which suppliers can be held responsible. Analysts say that the passage of the amended law is crucial for India and the United States in their trade agreement negotiations this year, aimed at increasing bilateral trade from last year's $191 billion to $500 billion by 2030. According to sources, the Indian government is confident of getting the amendments approved at the parliamentary monsoon session scheduled to start in July. India's 2010 nuclear liability law was inspired by the 1984 Bhopal gas disaster, the world's deadliest industrial accident, which occurred at a factory owned by the American multinational company Union Carbide Corp, resulting in over 5000 deaths. In 1989, Union Carbide Corp agreed to pay $470 million in out-of-court compensation. The current liability law effectively blocked Western companies from this huge market and strained US-India relations after the nuclear cooperation agreement reached in 2008. Compared to Russian and French companies, American companies were also at a disadvantage as the liability for accidents is borne by the government in Russia and France. The draft law also proposes to reduce the liability cap for small reactor operators to $58 million, but is unlikely to change the current cap of $175 million for large reactor operators. India is betting big on nuclear energy to meet its growing energy needs without compromising its net zero emission commitments. To this end, India has proposed allowing private companies to build such nuclear power plants. Indian conglomerates such as Reliance Industries, Tata Power, Adani Power, and Vedanta Ltd have discussed investing approximately $5.14 billion each in the industry with the government.