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Uncertainties Highlighted in the Indo-American Nuclear Partnership

India is moving closer to passing a Civil Liability for Nuclear Damage bill. This legislation would ensure that foreign suppliers of civilian nuclear equipment would pay no more than $322 million compensation in the event of a nuclear accident. Passage of this bill would constitute a landmark in India’s nuclear development.

With American assistance, India procured a Nuclear Suppliers Group exemption from its restrictions on nuclear trade with non-signatories to the Nuclear Non-Proliferation Treaty in 2008. This effectively opened India’s nuclear power market to international investment, allowing nuclear firms to build reactors, share nuclear technology and provide uranium to fuel India’s energy needs.

France and Russia moved quickly to establish a foothold in this emerging market. These states financially guarantee their flagship nuclear firms, such as AREVA and Rosatom. This means that the state would pay out on claims deemed too substantial to be met solely from the firm’s budget. The absence of an Indian nuclear liability legal framework has not deterred these suppliers from entering the market, as liability claims are ultimately the problem of their host states.

American nuclear firms, such as GE-Hitachi or Westinghouse, are privately owned and enjoy no such guarantee from Washington. Without a nuclear liability framework, these firms could face claims of unlimited size in the event of an accident, with no assistance from Washington. These firms have had to watch deals, such as the agreement for Russia to build 16 nuclear reactors, be concluded while they wait for the long-delayed civil liability legislation to be passed.

The legislation debate, ongoing since 2008, has served as an effective insight into Indian domestic concerns regarding New Delhi’s growing civilian nuclear infrastructure and the nature of its partnership with the US.

Some critics have interpreted American pressure to pass the legislation as advancing US commercial interests with a cavalier attitude toward Indian population safety.

The raising of the cap to $322 million was partly a response to these arguments, which pointedly asked if the previously proposed limit of $100 million was meant to represent the worth of Indian lives lost in a nuclear accident. This debate on compensation for industrial accidents has also aroused cultural memories of the Bhopal atrocity, fostering mistrust.

An advisory panel has recommended that a government operator, Nuclear Power Corporation of India, run all Indian nuclear power plants, even if they have been purchased from external suppliers. This policy reflects continuing popular uncertainties regarding the liability legislation. The establishment of a single state operator is intended to compel the government’s attention and strengthen its hand in negotiations with international nuclear firms in the event of an accident.

This discourse on the liability legislation occurs in the context of wider Indian discussions concerning the meaning of the 2005 US-India civil nuclear agreement. This deal set in motion the process leading to the Indian Nuclear Suppliers Group exemption. Official remarks from Washington and New Delhi reaffirm mutual understanding that the nuclear deal served as the cornerstone of a new, wide-ranging strategic partnership.

However, Indian internal discussions are less enthusiastic on this point, and instead focus on how to maximise Indian ‘strategic autonomy’ in the international system without losing access to American investment and military equipment.

As New Delhi and Washington prepare for US President Barack Obama’s visit to India in November, these nuclear issues are central to understanding the emerging shape of the US-Indian strategic partnership. The status of these Indian nuclear concerns will continue to be a key determinant of the character of US-India relations in the near future.

By. Frank O'Donnell

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