Government Set to Relax Nuclear Liability Laws to Attract Foreign Firms
- MGMMTeam
- Apr 18, 2025
- 3 min read
India is set to amend its nuclear liability laws to limit penalties for equipment suppliers in the event of an accident, aiming to attract foreign investment back into its nuclear industry, particularly from US companies. As reported by Reuters, three government sources revealed that the proposed changes would remove a critical provision in the 2010 Civil Liability for Nuclear Damage Act, which currently holds suppliers liable for unlimited damages in the case of an accident. This law was introduced following the 1984 Bhopal gas tragedy.
External Affairs Minister S. Jaishankar hinted at this development earlier this month. During his speech at the Carnegie Global Technology Summit 2025 in New Delhi, Jaishankar acknowledged the need to reassess the liability law, noting, "The current law has not instilled confidence in the international nuclear industry," while also pointing out significant private sector interest in entering the field.
Proposed Draft Law Introduces Compensation Cap and Time Limit
According to a Reuters report, a draft law developed by the Department of Atomic Energy suggests limiting the compensation operators can seek from suppliers to the value of the original contract, while also introducing a specific time frame for such claims. This differs from the current law, which places no cap on compensation or liability duration.
Law Amendment to Boost US Participation
The proposed amendments are part of Prime Minister Narendra Modi's initiative to increase nuclear power generation twelvefold, reaching 100 gigawatts by 2047. The changes aim to align India with international standards, where the primary responsibility for safety lies with the operator rather than the supplier. This move is expected to pave the way for companies like General Electric and Westinghouse Electric, which have previously avoided India’s nuclear market due to legal risks, to enter the sector.
Parliamentary Approval and Trade Agreements
The law will need parliamentary approval and is expected to be introduced during the Monsoon Session in July.
The approval of the amended law is considered crucial not only for the expansion of nuclear energy but also for finalizing a trade deal with the US, aiming to boost bilateral trade to $500 billion by 2030, up from $191 billion last year.
Engaging the Private Sector
The government is also looking into the involvement of private Indian companies in nuclear energy projects. Major domestic conglomerates are said to be in talks to invest approximately $5.14 billion each in the sector.
The Bhopal Gas Disaster
The current law was shaped by the aftermath of the 1984 Bhopal gas tragedy, which sparked strong public and political demands for greater corporate accountability. The 2010 legislation, introduced in this climate, effectively barred Western companies from entering India's nuclear sector and strained bilateral relations, despite the landmark civil nuclear agreement with the US in 2008.
The Bhopal Gas Tragedy occurred on December 2–3, 1984, when a gas leak at a pesticide plant owned by Union Carbide India Limited (UCIL) released a toxic cloud of methyl isocyanate (MIC) gas. The leak, triggered by a chemical reaction, impacted surrounding areas in Bhopal, immediately claiming the lives of around 3,000 people and causing 15,000–20,000 additional deaths from long-term effects. More than 500,000 individuals were exposed, many suffering from serious health issues such as respiratory problems and birth defects.
The disaster also caused significant environmental damage, contaminating water and soil. Legal battles followed, with Union Carbide Corporation (UCC), the US-based parent company, settling with the Indian government in 1989 for $470 million, a sum widely criticized as inadequate. In 2001, Dow Chemical acquired Union Carbide, and the tragedy remains the deadliest industrial disaster in history.
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