Like other U.S. officials who have been raising the issue in public and private, Secretary of State Hillary Clinton used her recent visit to India to deliver a tough message on the alleged inadequacy of the country's nuclear liability law. Although the July 2005 Indo-U.S. joint statement makes no mention of the liability issue, U.S. companies managed successfully to bring it on to the bilateral agenda three years later when India promised to accede to the Convention on Supplementary Compensation for Nuclear Damage (CSC). Joining the CSC involves passing a compatible domestic nuclear liability law, something the Manmohan Singh government finally did last year. The CSC is intended to give a free pass to the supplier of nuclear equipment in the event of a disaster, which is why the U.S. is so keen for India to ratify it. However, Parliament, and ultimately the government, were unwilling to waive the normal operation of tort law and accordingly incorporated two provisions that might expose suppliers to damage claims if a nuclear accident is traced to defective equipment. Against the backdrop of public outrage over the scandalous denouement of the Bhopal gas disaster cases, it is a miracle that the law is not tougher.
The U.S. believes these provisions are incompatible with the CSC and hopes the implementation rules being drawn up will firmly shut the door on supplier liability. Even if such a thing were legally possible — which it isn't, since rules cannot upend the basic intent of a law — Dr. Singh can ill afford the political firestorm that any dilution of the liability Act would set off. During her visit, Ms Clinton also encouraged India to consult the International Atomic Energy Agency on the compatibility of its law with the CSC — an absurd suggestion since the IAEA has no locus. At a time when the whole world is still digesting the environmental and financial consequences of the Fukushima-Daiichi nuclear calamity, Washington must reconcile itself to the fact that the Indian body politic will not accept any dilution in existing liability provisions. Rather than exerting political pressure, U.S. vendors should bite the bullet and accept this as the price they will have to pay to win a share of the lucrative Indian nuclear power industry. If insurance costs lead to higher reactor prices, so be it. It is better to know the true cost of nuclear energy before buying thousands of megawatts worth of reactor equipment than pay for a multi-billion dollar cleanup the way Japanese taxpayers are now being forced to do.
