US Fears Indian Nuclear Liability Law May Deter Foreign Suppliers

By Arun Kumar

Washington, Sep 7 (IANS) The passage of a nuclear liability bill by Indian parliament making suppliers of nuclear equipment also potentially liable threatens to cast a long shadow over India's plans to open an estimated $150 billion nuclear market to foreign companies.

US officials are unwilling to comment publicly on the limiting liability legislation, a key piece under US law for the implementation of the landmark India-US civil nuclear deal, but American firms hoping to supply equipment to India are less than happy about the language.

The US India Business Council, representing 300 top US companies doing business with India, wanted India to adopt a nuclear liability regime "channelling absolute and exclusive liability to nuclear power plant operators and establishing a sole remedy for compensation of claims".

"These principles are basic to international best practices as reflected in the International Atomic Energy Agency's Convention on Supplementary Compensation (CSC)," it said in a guarded reaction to the legislation after its passage in the Rajya Sabha last week.

USIBC said it was reviewing the Indian legislation and would seek clarification from the Government of India on whether and how Indian and foreign suppliers can move forward with the Nuclear Power Corporation of India (NPCIL) to vitalise India's nuclear power sector."

But "The absence of an effective, CSC-compliant liability regime could preclude involvement by the private sector - both Indian and foreign - and stymie India's multi-year effort to develop civil nuclear power," the group warned.

Lisa Curtis, Senior Research Fellow for South Asia at The Heritage Foundation, a Washington think tank, has also warned that what she called a "flawed" legislation could cast a pall over the historic India- US civil nuclear deal.

Noting that the Indian " liability law also follows a dust-up between the US and India over flawed US legislation" she said: "Washington and New Delhi need to move past the recent irritants in the relationship caused by domestic politics in both countries so that this important bilateral partnership will continue to advance."

Ashley Tellis, a senior associate at the Carnegie Endowment for International Peace who was closely involved in negotiating the nuclear deal, fears the legislation will be "a significant deterrent not only to US business but, equally importantly, to Indian and other international private business as well."

Daryl Kimball, executive director of the Arms Control Association, said it is ironic that after the Bush administration "expended enormous political and diplomatic capital to exempt India from US non-proliferation laws and [Nuclear Suppliers Group] guidelines. the new Indian law may effectively deny US nuclear supply firms access to the Indian market, which was a chief selling point for the deal."


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