Fears over N-liability law are misplaced

Looking back, after clarification from high levels in government, the recent controversy centring on alleged kid-glove treatment being envisaged for American firms for the supply of civil nuclear reactors in violation of the nuclear liability law appears misplaced.

Legal opinion tendered by the attorney-general to the Department of Atomic Energy — which became the subject of a Cabinet note — suggested that Indian civil nuclear plant operators could waive right of recourse against a foreign equipment supplier in the event of an accident. This set off something of a political storm. This need not have been the case. In a legal context any entity is within its rights not to push for damages although it may be legally entitled to do so. Needless to say, an Indian nuclear plant operator (a government company) will have to explain to Parliament why it seeks to forgo right to recourse, should it do so.
However, in this country a “sell-out” mentality inexplicably appears to operate in political circles when it comes to dealings with the United States although it is hard to think of a single incident when we sold out to the Americans. In this particular case, perhaps the shadow of the Bhopal tragedy of 1984 involving the Union Carbide company of the US may have hung over Opposition parties which were off the blocks straightaway and began to criticise the government for diluting the liabilities clause relating to suppliers’ deficiencies.
Evidently this was premature over-reaction. The government has since clarified that the law of the land cannot be violated. It is precisely on account of the stout Indian liability law that US companies had so far not come forward to sell nuclear reactors to India for power generation, although in 2005 it was persistent political effort by Washington alone that helped India obtain the necessary international waivers, enabling it to engage in nuclear commerce when it has not signed the nuclear non-proliferation treaty.
Russian and French nuclear reactor manufacturers also have issues with our liability law but they have not allowed this to come in the way of commencing work here. The Americans have taken a more alarmist view. At any rate, calculations show that power generated by US reactors may be twice as expensive as other competitors. In that case, the US entities would be edged out anyway. But it is a good sign that the Nuclear Power Corporation of India Ltd and Westinghouse have recently signed a confidentiality agreement and are poised to go through with the early pre-works agreement when Prime Minister Manmohan Singh is in the US next week. The geopolitical implications of such compacts cannot be overlooked.