India considers nuclear law amendments for greater private participation

Source: The post India considers nuclear law amendments for greater private participation has been created, based on the article “Should India amend its nuclear energy laws?” published in “The Hindu” on 6 June 2025. India considers nuclear law amendments for greater private participation.

UPSC Syllabus Topic: GS Paper3-Infrastructure: Energy

Context: India is considering amendments to its nuclear laws—primarily the Civil Liability for Nuclear Damages Act (CLNDA), 2010, and the Atomic Energy Act (AEA), 1962—to allow private sector participation. This step aligns with India’s ambition to boost nuclear capacity significantly from 8 GW to 100 GW by 2047, aiming for clean energy expansion.

For detailed information on India’s plan to amend nuclear liability laws read this article here

Need for Amendments

1. Goals and Capacity Expansion: India’s target of reaching 100 GW of nuclear energy capacity requires expanding beyond existing domestic capabilities. Achieving this long-term goal would need foreign involvement in addition to strengthening local infrastructure.
2. Investment Roadblocks: Current Indian laws prevent foreign companies from participating in the nuclear sector. This legal barrier discourages necessary investments and stifles the envisioned growth in nuclear capacity.
3. Foreign Companies and Liability Issues: Companies from countries like France, Japan, and the U.S. have expressed concerns over the liability framework, saying it prevents their entry. Russia’s Rosatom was indemnified by India under earlier contractual arrangements, which are no longer legally permissible under current law.

Critical Perspectives

1. Questioning Investment Rationale: The assumption that legal amendments alone would unlock foreign investments is contested. Major nuclear suppliers have not significantly expanded capacity domestically, which raises doubts about their ability or interest in large-scale investment in India.
2. Economic Considerations: Investment decisions are primarily guided by profitability. There is no clear trend suggesting that changes in liability laws would automatically trigger large-scale investments, especially when supplier countries themselves are not aggressively expanding nuclear infrastructure.

Liability and Accountability Concerns

1. Past Legislative Debates: Previous proposals to amend liability provisions faced criticism on the grounds that they allowed multinationals to escape responsibility, especially in light of past industrial disasters like the Bhopal gas tragedy.
2. Impact on Indian Industry The liability framework has also affected domestic suppliers. After the CLNDA came into force, suppliers began refusing to provide components. In response, public sector operators like NPCIL offered indemnity through contracts—a legally untested and controversial solution.

Technology Transfer and Strategic Concerns

1. Technology Transfer Realities: Technology transfer by private firms depends on commercial interest and regulatory allowances by supplier governments. Even past collaborations with Russia did not involve full transfer of critical technologies.
2. Small Modular Reactors (SMRs): Newer companies producing SMRs show greater willingness for technology transfer due to market access motivations. However, high capital costs and unproven scalability of factory-based production models limit near-term potential.

Future Viability and Economic Risks

1. Economic Risks of SMRs: The main challenge with SMRs is not their technical design but their high development and installation costs. The assumption that SMRs will reduce costs through assembly-line manufacturing remains untested.
2. Uncertain Market Dynamics: India’s previous efforts to attract foreign technology in sectors like defense saw limited success despite liberalised FDI policies. Similarly, hopes of SMR-based transformation may remain speculative unless economic and technological conditions improve.

International Liability Standards

1. Convention on Supplementary Compensation (CSC): The CSC focuses on quick victim compensation and limits liability to operators unless contractually agreed or in cases of gross misconduct. This aims to avoid lengthy legal processes and ensure timely relief.
2. Sovereign Responsibilities: Governments are ultimately responsible for compensating victims of nuclear accidents. Insurance pools and CSC mechanisms provide a structured fund to enable immediate disbursement in case of incidents.

Question for practice:

Discuss the rationale and implications of amending India’s existing nuclear liability laws to facilitate private and foreign participation in nuclear energy expansion.