India’s Nuclear Energy Laws, Legal Provisions and Amendment

India aims to scale up its nuclear energy capacity from 8 GW to 100 GW by 2047 to meet clean energy goals. For this, it is considering amending its nuclear laws — the Civil Liability for Nuclear Damage Act (CLNDA), 2010 and the Atomic Energy Act (AEA), 1962 — to allow private and foreign companies to participate in building and operating nuclear power plants. Read this article to learn about Should India Amend its Nuclear Energy Laws?

India’s Nuclear Energy Laws: Legal Provisions

India’s Nuclear Energy Sector is regulated, for the most part, by two major legislative instruments: the Atomic Energy Act of 1962 and the Civil Liability for Nuclear Damage Act (CLNDA) of 2010. The 1962 Act provides the Central Government with overarching authority for developing, controlling, and using atomic energy for peaceful applications, thereby creating a state monopoly where only government-owned organizations such as Nuclear Power Corporation of India Ltd (NPCIL) can construct and run nuclear power plants.

The CLNDA 2010, which came into force after the Bhopal Gas Tragedy and was designed to provide quick compensation to victims of a nuclear accident, established a new “no-fault liability” regime. Although it burdens the operator (NPCIL) with primary liability, it controversially incorporates a “right of recourse” whereby the operator can recover payment from suppliers in the event of defects or poor services, a provision that has been a contentious issue and a disincentive for foreign nuclear reactor suppliers.

• Civil Liability for Nuclear Damage Act, 2010 (CLNDA): Holds the operator solely liable in case of a nuclear accident but also allows the operator to seek recourse against suppliers under certain conditions (Section 17(b)).
  • This has deterred foreign suppliers due to the fear of litigation and financial risk.
• Atomic Energy Act, 1962 (AEA): Restricts nuclear energy activities (especially reactor construction and operation) to government entities or those authorised by the government.
  • Private sector participation is currently barred in nuclear power generation.

Why Is There a Need to Amend India’s Nuclear Energy Laws?

• To Attract Foreign Investment & Technology: India’s nuclear expansion goals require large capital, advanced designs (like SMRs), and foreign expertise.
• To Enable Private Participation: The Current framework allows only government-run companies like Nuclear Power Corporation of India (NPCIL) to build and operate reactors.
• To Realise the 2008 U.S.-India Civil Nuclear Deal: The full potential of the agreement remains unrealised due to India’s stringent liability laws.

Arguments in Favour of Amendment

• Foreign Suppliers Demand Legal Clarity: Companies from the U.S., France, and Japan have explicitly cited the liability law as a reason for not entering India’s market.
• Legal Impediment to Domestic Supply Chains: Indian suppliers have refused to supply components post-2010 due to fear of liability, affecting domestic capacity (e.g., the Kovvada project).
• SMRs Need Private and Foreign Innovation: Newer, smaller modular reactors (SMRs) are commercially attractive and safer, but India needs external participation to develop them at scale.
• International Norms (CSC): The Convention on Supplementary Compensation (CSC) channels liability to operators and ensures swift compensation — a model India could adopt more fully.

Arguments Against Amendment

• Investment is not the Main Barrier: Critics argue that high capital costs and poor returns are bigger deterrents than liability laws. E.g., Westinghouse went bankrupt.
• Precedent of Limited Tech Transfer: Past increases in FDI caps in the defence sector did not lead to major technology inflows; similar may happen in nuclear.
• Dilution of Accountability: Removing supplier liability raises concerns of justice and public safety, especially in the wake of past industrial disasters (e.g., Bhopal gas tragedy).
• No Strong Foreign Interest Yet: France, Russia, and even U.S. companies have shown limited domestic nuclear growth, raising doubts about their real investment intent in India.

Way Forward

• Balanced Legal Reform: Amend liability laws to limit supplier liability reasonably while keeping safeguards against wilful negligence.
• Empower Independent Regulation: Strengthen the Atomic Energy Regulatory Board (AERB) to ensure robust design approvals and public confidence.
• Support Domestic Industry: Build capacity through public-private partnerships, especially in SMRs and component manufacturing.
• Strategic Tech Agreements: Leverage diplomatic ties for conditional technology transfers while offering market access.
• Develop Insurance Pools: Create a robust nuclear insurance mechanism to ensure speedy compensation without overburdening operators or suppliers.

Sharing is caring!