Debate Over Nuclear Liability and Energy Policy in India

The Debate Over Nuclear Liability: A Question of Safety, Sovereignty, and Strategic Trade-offs

India’s proposed amendments to its nuclear policies, particularly the Civil Liability for Nuclear Damage Act (CLNDA), 2010, and the Atomic Energy Act (AEA), 1962, raise critical questions about the balance between economic imperatives and public safety. The government claims these amendments are vital for capacity expansion and private sector participation, but at what cost?

The crux of the issue is clear: diluting supplier liability and opening the gates for private sector involvement may accelerate nuclear energy development, but it risks undermining both safety standards and India’s strategic autonomy in critical sectors. This dilemma, rooted in unresolved legislative and institutional gaps, could define the trajectory of India's energy policy for decades to come.

Institutional Landscape: Liability, Autonomy, and Amendments

The Civil Liability for Nuclear Damage Act (CLNDA), 2010, designed as a post-Fukushima safety mechanism, places primary liability on the operator (NPCIL) while also allowing operators to seek recourse against suppliers for defective equipment or services. This ‘right of recourse’ is unique to India; it diverges from international norms like the Convention on Supplementary Compensation (CSC), which India ratified in 2016 and assigns sole liability to the operator. The CLNDA caps operator liability at ₹1,500 crore, a figure that appears insufficient given the potential scale of nuclear disasters.

In contrast, the Atomic Energy Act, 1962, prohibits direct private-sector involvement, centralizing control under public sector entities such as NPCIL. Amendments in 2015 allowed joint ventures with PSUs, but the exclusion of private companies from reactor operations remains a significant hurdle to technological modernization and capacity expansion.

The Argument: A Risky Path to Energy Expansion

India’s Nuclear Energy Mission envisions an ambitious rise in capacity—from the current 8.8 GW to 22,480 MW by 2031–32 and eventually 100 GW by 2047. The Union Budget 2025–26 allocated ₹20,000 crore for this mission, targeting advancements such as the development of Bharat Small Reactors (BSRs). While these goals are laudable, the legislative ambiguity surrounding liability and private participation could hinder their realization.

Consider supplier liability. By removing or weakening the ‘right of recourse,’ India risks replicating past industrial disasters like Bhopal, where victims were left without adequate reparations. The government’s claim that aligning liability norms with the CSC will attract foreign investment ignores the fact that safety guarantees are non-negotiable for public trust. NSSO data from 2023 indicates widespread skepticism about nuclear safety standards among rural residents living near plant sites.

Investment challenges are also rooted in legislative delays. The Jaitapur Nuclear Power Project, expected to be the world’s largest, has languished for over a decade due to unresolved liability issues. NPCIL and EDF (France) remain at odds over indemnity clauses, underscoring how partnership agreements flounder under India’s unique liability framework.

Technological transfer is another contentious issue. For example, Small Modular Reactors (SMRs) necessitate foreign proprietary designs, yet private companies are unlikely to share sensitive innovations in a regulatory environment fraught with liability risks. This ties into broader strategic concerns—should India trade autonomy for technological expediency?

The Counter-Narrative: Can Pragmatism Drive Progress?

Proponents argue that relaxing liability norms is a pragmatic step toward unlocking investments and expediting stalled projects. They point to the global precedent where CSC norms have allowed countries like Japan and South Korea to attract foreign suppliers without compromising safety. Additionally, private-sector participation could bring the innovation necessary to meet ambitious energy targets, particularly for cleaner reactors like SMRs and BSRs.

The fiscal argument is also compelling. India’s limited allocation of ₹20,000 crore for nuclear energy requires leveraging private resources to meet long-term goals. Public sector entities like NPCIL have already struggled to close funding gaps in massive infrastructure projects like Kudankulam and Jaitapur, suggesting that private capital could be the missing piece in the puzzle.

International Comparison: South Korea’s Pragmatic Model

South Korea, a signatory to the CSC, has effectively leveraged foreign partnerships for its nuclear program while ensuring operational safety through rigorous state oversight. South Korea’s liability norms channel all accident-related compensations to the operator, simplifying investment agreements and avoiding disputes. However, unlike India, South Korea maintains strict regulatory frameworks enforced by the Korea Institute of Nuclear Safety (KINS). Regulatory trade-offs are minimal because safety standards are non-negotiable, an approach India must emulate before embracing CSC norms.

Assessment: A Crossroads for India’s Nuclear Future

India’s debate over nuclear liability legislation is emblematic of broader governance challenges—balancing economic growth with public accountability and strategic sovereignty. What is missing in the mainstream narrative is the recognition that legislative clarity is not an economic impediment but a safety imperative. Diluting supplier liability won’t just undermine public trust; it could erode India’s strategic autonomy in critical technologies like SMRs.

The path forward requires a calibrated approach. First, strengthen the Atomic Energy Regulatory Board (AERB) to ensure stringent oversight regardless of operator liability norms. Second, revise the CLNDA to raise liability caps, aligning them with realistic estimations of disaster costs. Finally, consider a phased inclusion of private-sector actors, starting with non-critical areas like reactor construction while reserving sensitive technology operations for NPCIL.

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