ANALYSIS: Indian government in bind over nuclear damages bill

By Sunrita Sen Mar 15, 2010, 14:24 GMT

New Delhi - The Indian government decided Monday not to table a nuclear liability bill in Parliament after major opposition parties and rights activists expressed reservations.

The government decided instead to 'hold further consultations' on the bill, which would cap liabilities in a nuclear accident, Minister of State for Science and Technology Prithviraj Chavan said.

Critics said the bill would cap the state's compensation to victims of an accident at a nuclear installation at too low of a level.

The bill was also under fire for absolving foreign firms who supply nuclear equipment or installations to India from significant compensation obligations to victims of accidents in which their products or services are involved.

The government said the bill is needed to bring India in line with international standards, to make it able to trade with foreign suppliers of nuclear technology and to kick-start its ambitious nuclear power programme.

The bill limits the liability of a nuclear plant operator to 5 billion rupees (about 110 million dollars) in an accident. In India, the sole operator of nuclear plants is the state-run Nuclear Power Corporation India Ltd.

The government would be liable for up to a further 21.33 billion rupees. Any liability beyond that would in theory be sourced from a fund set up by international agencies although this fund has not yet been clearly defined.

The legislation would also set up a commission with the powers of a civil court to investigate accidents and determine responsibility.

Rights activists are particularly angered by a clause that sets a 10-year limit for seeking compensation from the date of the accident. The effects of a nuclear disaster can impact future generations, they argued, and could take more than a decade to become apparent.

India's main opposition Bharatiya Janata Party (BJP) and four leftist parties have criticized in particular the bill's capping of the state's liability and the absolving of foreign firms from extensive liability.

In the case of an accident caused by a defect in a foreign-built nuclear reactor, the bill 'practically makes it impossible to assign liability to the supplier,' the leftist parties said in a joint statement.

Lawyer Soli Sorabji told the environmentalist group Greenpeace that the bill was 'discriminatory' while strategic affairs commentator Brahma Chellaney said it favoured the interests of foreign reactor builders.

In defence of the bill, Chavan said if the cap were too high, insurance companies would refuse to insure the operator and no one would want to invest in India.

A three-decade ban on the trading of nuclear materials with India was lifted in 2008 by the Nuclear Suppliers Group, a 46-nation body that works to control the international movements of fissile material, after India and the United States signed a landmark civilian nuclear agreement.

But even after the lifting of the ban, nuclear equipment manufacturers in the US may not sell their equipment to countries that do not have a liability law in place.

'All the effort that went into securing the Indo-US Civil Nuclear Agreement will go to waste if we do not follow up with this legislation,' Chavan said.

French and Russian suppliers also required New Delhi to pass the legislation before they could sell to India, he added.

Chavan said the level of the liability cap was decided after examining similar laws in other countries.

But the vociferous opposition by the BJP and the left has forced the government to ease off.

'There is no hurry to introduce the bill,' Chavan said soon after the government informed the speaker of the Lok Sabha, or lower house of Parliament, that it would not be tabling the bill Monday. 'We will hold further consultations.'

Prime Minister Manmohan Singh is believed to have wanted the bill passed before he goes to the US in April for a nuclear security meeting.

Singh's government narrowly escaped being voted out of power in 2008 when the leftist parties withdrew their support over the India-US Civil Nuclear Agreement.

Both the BJP and the left have accused the government of bias in favour of US firms with the bill.

'It is a harmful piece of legislation meant to serve the interests of the US and its nuclear industry,' BJP spokesman Ravi Shankar Prasad said.

India was under no real obligation to pass the bill even if the government said otherwise, Chellaney wrote in an editorial in the newspaper The Hindu. Despite international efforts to create a common standard on liability and compensation since the Chernobyl disaster, little headway has been made in the area, he wrote.

'In seeking to invite US reactor builders, should a poor country rush to pass a special law that skews business terms in their favour, gratuitously burdens the Indian taxpayer and ignores lessons of the Bhopal disaster?' Chellaney asked.

More than 15,250 people died in 2004 in a gas leak at the US company Union Carbide's plant in the central Indian town of Bhopal, and the health of another 100,000 was affected permanently.

The survivors are still fighting for criminal proceedings against accused officials and what they term just compensation.