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India Set to Open Up Civil Nuclear Sector
In nuclear energy push, Govt to allow private operators, limit their liability
Context: The Indian government is likely to move two major amendments in laws governing the civil nuclear sector during the upcoming monsoon session of Parliament. This move could mark an unprecedented liberalisation of one of India’s most closed strategic sectors.
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- The potential liberalisation of India’s civil nuclear sector comes at a pivotal time.
- India is looking to diversify its energy mix with clean, non-fossil fuel sources, and nuclear power — especially small modular reactors — could play a significant role in achieving its net-zero emissions goals by 2070.
What’s Changing?
- Sources familiar with the developments have confirmed that the two planned amendments aim to:
- Ease Nuclear Liability Provisions: The proposed changes to the Civil Liability for Nuclear Damage Act, 2010 are expected to significantly reduce the perceived financial risk for equipment suppliers.
- The amendments would:
- Cap the liability of suppliers to the original value of the contract in the event of a nuclear accident.
- Introduce a time frame limitation on when this liability can be applied.
- Reason: The existing law has deterred foreign players like GE-Hitachi, Westinghouse, and Framatome due to fears of long-term liability in case of an accident.
- Current Provision: The law channels operator liability to suppliers, which has been a key barrier for foreign investment.
- The amendments would:
- Allow Private Sector Participation: Changes to the Atomic Energy Act, 1962.
- Objective: To permit private companies, and potentially foreign entities, to operate nuclear power plants.
- Current Situation: Only state-owned entities like NPCIL and NTPC Ltd are allowed to operate nuclear facilities.
- Significance: Would be a first-ever opening of nuclear operations to the private sector, both Indian and foreign.
A Strategic Opening for Indo-U.S. Ties
- These reforms are seen as essential to unlocking the commercial potential of the Indo-US civil nuclear deal, signed nearly two decades ago.
- Could be a major highlight in a broader trade and investment package with the United States, possibly culminating in a new trade pact under negotiation.
- The government’s commitment to push these reforms was underscored in the Union Budget earlier this year. While passing both bills—especially the liability-related one—may prove politically challenging, they are being treated as a legislative priority.
US Clears Key Regulatory Hurdle
- Holtec International’s Approval by US Department of Energy (DoE): On March 26, 2024, Holtec International received specific authorisation (SA IN2023-001) under the US ‘10CFR810’ regulation.
- What it means: Holtec can now transfer small modular reactor (SMR) technology to Holtec Asia, Tata Consulting Engineers Ltd, and Larsen & Toubro Ltd in India.
- This was under 10CFR810, part of the US Atomic Energy Act of 1954, previously a major hurdle.
- Background:
- 10CFR810 had restricted US firms from doing design or manufacturing work for nuclear equipment in India.
- This was a major obstacle to India’s plans to co-produce SMRs and nuclear components domestically.
- Outcome: The US has removed a critical barrier, shifting the onus onto India to follow through with enabling legislation.
Strategic and Economic Implications
- Revival of Indo-US Nuclear Deal: These moves aim to realise the long-delayed economic benefits of the 2008 deal. Could boost bilateral trade, and may be packaged as part of a larger Indo-US trade pact under negotiation.
- Global Investment Potential: Foreign vendors will have greater legal clarity and reduced risk, opening the floodgates for technology transfer, FDI, and co-development.
- Energy Security: Encouraging SMRs and private operations may help diversify India’s energy mix, aligning with climate goals and energy independence.
