Capitulating to US

The highlight of President Obama‘s India visit was arriving at an understanding on the operationalisation of the Indo–US nuclear deal. The operationalisation of the deal has been pending for over six years. Obviously, one would get a simple doubt: What dramatic change cleared the obstacles in the way. The devil, however, lies in the detail. The contentious issue that stalled the operationalisation was the Indian nuclear liability law. This law gives the Indian operator to seek compensation for damages from the foreign suppliers in the wake of a nuclear accident if it occurred due to supply of equipment, material and components with patent or latent defects. The US nuclear industry is opposed to any such liability on them. Now, the question is what has happened to this in the Modi-Obama deal.

The government has to give clarification on many questions on this deal. According to reports, it has agreed to form an insurance pool backed by public sector Indian companies to indemnify foreign suppliers .This insurance pool would be to the tune of Rs 1,500 crore. The government would also contribute to this pool. It simply means Indian people had to provide insurance for themselves instead of making the foreign suppliers to do so. This is tantamount to violation of the civil nuclear liability law passed by the parliament in 2010. This law keeps the liability on the foreign suppliers.

Why should Indian insurance companies, that too public sector, bear the burden of insuring the nuclear trade? Why can’t the US suppliers obtain insurance from international insurance companies? If American companies are not confident of the safety of their nuclear reactors or equipments or material, why are Indian public sector insurance companies asked to show that confidence? Why should the Indian people pay for insuring foreign supplies?

The liability obligation on foreign suppliers would not only compensate us in the wake of a nuclear disaster but even would ensure much greater quality and safety standards as the fear of liability hangs over them. The need for liability on foreign suppliers got reinforced after the recent Japanese experience. Indian experience with the Union Carbide that caused the Bhopal gas tragedy also substantiates our demand for supplier liability. The US firm GE had designed the reactors that suffered in the Fukushima nuclear accident in Japan.

The earlier UPA government intended to bring in a diluted liability law. But, the opposition including the BJP forced the Manmohan Singh government to make foreign suppliers liable through an act of Parliament. But, now, the NDA government seeks to dilute the liability clause keeping the negotiations opaque. Any nuclear disaster causes enormous damage. For instance, Japan spent about $25 billion in the aftermath of Fukushima disaster. Similarly, the estimated loss in Chernobyl was about $15 billion and the long-term cost was as high as $300 billion. This signifies the importance of making the foreign suppliers liable.