Unlocking potential of India-US nuclear deal

Nearly two decades after the pact was signed, certain hurdles remain in realising its full potential, primarily due to issues related to India’s nuclear liability law.
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Image used for representational purposes onlyPhoto | Express illustrations
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NEW DELHI: When dealing with major powers, context is everything. The farewell visit of the US National Security Adviser to India, aimed at finalising certain details of ongoing nuclear and high-technology cooperation, brought the landmark 2008 civil nuclear deal back into focus. The deal, finalised after three years of complex negotiations, marked a turning point where both sides overcame past hesitations and the bitterness of their nuclear history, aiming to set their strategic relationship on an irreversible course.

However, nearly two decades after the pact was signed, certain hurdles remain in realising its full potential, primarily due to issues related to India’s nuclear liability law and several key Indian atomic institutions still being on the US blacklist (entity list).

Significance of the India-US nuclear deal of 2008

The deal ended India's long winter of nuclear isolation as it refrained from signing the Non-Proliferation Treaty (NPT), which New Delhi considers discriminatory, and paved the way for civil nuclear cooperation with other countries. The US played a significant role in India’s nuclear and space programmes in the decades following the country’s independence, but India stayed away from developing nuclear weapons. The global nuclear landscape, however, changed after 1968.

The NPT signed that year, was an agreement between major nuclear and non-nuclear powers aimed at preventing the spread of nuclear technology. Though it didn’t prevent the spread of nuclear weapons, it was a significant achievement, at times a convenient tool, for arms control advocates, including the US to come after India following New Delhi's nuclear tests in 1974 and 1998.

Following the NPT, several export control and arms control regimes were established, including the Nuclear Suppliers Group (NSG) in 1974, which comprised a group of countries working to prevent the spread of nuclear weapons through export controls and guidelines. The Wassenaar Arrangement (WA), formed in 1996, is a voluntary agreement between countries to regulate the export of conventional arms and dual-use goods and technologies. The Australia Group, created in 1984, is an informal arrangement that helps exporting or transshipping countries minimise the risk of contributing to the proliferation of chemical and biological weapons (CBW).

The non-proliferation discussions of the 1990s led to India being denied access to critical dual-use technologies, and the 1998 nuclear tests worsened the situation. However, on the positive side, these challenges also created an opportunity for India and the US to engage in dialogue, looking at the ways to resolve their differences over nuclear and technology-related issues.

The India-US nuclear deal stands as the pinnacle of these conversations and engagements, serving as a foundation for deeper cooperation in high-tech fields during the Modi-Obama and Modi-Trump administrations. But the next major step forward came with the launch of the Initiative on Critical and Emerging Technologies (iCTE), unveiled by India’s National Security Adviser Ajit Doval and his US counterpart Jake Sullivan in 2022.

Why sudden interest in N-energy

The surge in artificial intelligence has fueled demand for huge computing powers and data centers that require vast amounts of electricity. As a result, nuclear power is now gaining appeal among tech giants facing rising energy needs. While it's uncertain how much nuclear energy will meet this demand, companies like Amazon, Microsoft and Google-parent Alphabet are betting big on nuclear power, with Bill Gates and Jeff Bezos backing such initiatives. Though more expensive, nuclear energy is a clean form of energy.

The Americans have yet to reap any commercial benefits from the nuclear deal for US companies. Of course, the India-US deal was embedded as part of the larger India-US global strategic partnership, touted as part of a transformed relationship between the two countries.

Reflecting on the complex and intricate process of negotiating the nuclear deal, Shivshankar Menon, former Foreign Secretary and a key negotiator of the Indo-US nuclear deal, addressed the criticism that India could not trust the Americans with such a strategically important agreement. In his book, Choices: Inside the Making of Indian Foreign Policy, he argued: "The real answer was that US commercial, strategic, and other interests, once enmeshed into the Indian programme, would ensure continuity." That’s true as the nuclear deal remained a focal point of the engagements with the two countries in the larger context of their high-technology and nuclear cooperation since 2008.

The Biden administration had unexpectedly given new momentum to the US-India nuclear partnership. Given Biden's pivotal role in the US Senate in sealing the US-India civil nuclear agreement, he as president, actively supported the goal of bringing this accord to fruition by completing negotiations for US nuclear reactor sales to India.

This renewed focus is reflected in the behind-the-scenes discussions between the two governments. A joint statement issued after Biden's September 2023 visit to India highlighted the two leaders' support for "intensified consultations between the relevant entities on both sides to expand opportunities for facilitating India-US collaboration in nuclear energy, including the development of next-generation small modular reactor technologies in a collaborative mode."

Impediment of nuclear liability law

Though both the countries reiterated their commitment to the nuclear deal, proposed solutions do not appear to have fully alleviated concerns of the American private nuclear suppliers about India's Nuclear Liability law -- the Civil Liability for Nuclear Damage Act (CLNDA).

They want the liability to rest only with the operator of the nuclear plants, which is the government entity of Nuclear Power Corporation of India (NPCIL). But Indian law provides a right to recourse through which the operator of the nuclear plant can hold the suppliers liable for faulty equipment or design of the reactors.

The supplier liability clause has its origin in the lessons learnt from the Bhopal gas tragedy of 1984. It so happened that in 2010, while Parliament was debating the nuclear liability legislation, the Supreme Court issued a ruling that reaffirmed an earlier settlement related to the 1984 gas leak tragedy at Union Carbide Corporation’s chemical plant in Bhopal in Madhya Pradesh. The court's judgment abruptly brought the horrific accident back into public consciousness, reminding the Indian legislators of the thousands of deaths and tens of thousands of injuries.

 Although various measures have been suggested to ease the law for suppliers, such as creating an insurance pool, American suppliers do not appear to be sufficiently convinced, as any additional financial burden would increase costs.

Benefits from civil nuclear deal

India undoubtedly reaped significant benefits from the civil nuclear agreement with the US since its announcement in 2005. To this day, New Delhi has leveraged this agreement to secure continued advantages, including more liberal licensing of controlled commodities, the further removal of Indian entities from the US entity list, and access to advanced technologies and weapons from the US. India became a member of Wassenaar Arrangement in 2017 and joined Australia Group next year besides stepping up civil cooperation with many countries.

But this led to unease in some quarters in the US with many experts pointing out the delay in setting in commercial cooperation between the two countries. One of early proponents of the deals, Ashley J Tellis, has been very vocal. “It is a pity that India has not moved far or fast to make good on the formal commitment that its own government made to the United States in 2008 in regard to fulfilling its obligations to purchase US nuclear reactors. Prime Minister Modi should now consider addressing this issue expeditiously so as to sustain the transformation of the US-India relationship initiated by his predecessors and that he himself has heavily invested in,” he said.

Capstone visit

Though on a farewell trip, Sullivan announced the lifting of many existing restrictions on nuclear and high technology cooperation. “I can announce that the United States is now finalising the necessary steps to remove long-standing regulations that have prevented civil nuclear cooperation between India's leading nuclear entities and US companies,” he said during a speech at the Indian Institute of Technology, New Delhi.

That means the US is in the final stages of removing Indian government entities—such as the Bhabha Atomic Research Centre (BARC), Indira Gandhi Atomic Research Centre (IGCAR), and Indian Rare Earths Limited (IREL)—from its entity list.

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