India moves to cap nuclear accident liability to woo US reactor suppliers

India is preparing to amend its nuclear liability laws to cap compensation claims against equipment suppliers in the event of nuclear accidents, according to three government sources. The move is primarily aimed at encouraging long-hesitant US firms, including General Electric and Westinghouse Electric, to participate in India’s expanding nuclear energy market.

The proposed changes come as part of Prime Minister Narendra Modi’s broader push to increase India’s nuclear power generation capacity twelvefold — from the current 6.8 gigawatts to 100 gigawatts — by 2047, Caliber.Az reports, citing exclusive material by Reuters.

The move is also intended to improve India's negotiating position in ongoing trade and tariff discussions with the United States.

The Department of Atomic Energy has drafted legislation to amend the Civil Liability for Nuclear Damage Act of 2010 by eliminating a key provision that exposes suppliers to unlimited liability in case of an accident, the sources said. Currently, the law allows nuclear plant operators to seek unlimited compensation from equipment vendors, without any specified time limit — a clause that has deterred foreign suppliers for over a decade.

“A liability cap will allay the major concern of the suppliers of nuclear reactors,” said Debasish Mishra, chief growth officer at Deloitte South Asia. “India needs nuclear power, which is clean and essential.”

The proposed amendments would bring India’s liability regime more in line with international standards, which place the responsibility for safety and accident liability primarily on plant operators rather than equipment suppliers.

The government hopes the changes will pave the way for long-stalled investments by US-based nuclear technology firms. Both GE and Westinghouse have avoided the Indian market due to the current legal exposure they would face in the event of an accident.

The amended law is also viewed as a critical step toward a broader trade agreement between India and the US, with both countries aiming to increase bilateral trade to $500 billion by 2030, up from $191 billion in 2023.

Sources say the government is optimistic that it will secure parliamentary approval for the amendments during the upcoming monsoon session, scheduled to begin in July.

Under the new proposal, the compensation an operator can claim from a supplier will be capped at the value of the original contract. The period during which the supplier can be held liable will also be explicitly defined in the contract — a departure from the current law, which specifies neither a monetary limit nor a timeframe.

India’s stringent 2010 nuclear liability law was shaped in the aftermath of the 1984 Bhopal gas tragedy — the world’s deadliest industrial disaster — in which a toxic gas leak at a Union Carbide facility killed over 5,000 people. In 1989, Union Carbide, then a US-based multinational, agreed to pay $470 million in an out-of-court settlement. The fallout from the tragedy continues to influence India’s regulatory approach to industrial safety and liability.

However, the sweeping liability provisions effectively froze Western companies out of India's nuclear sector, despite a landmark 2008 US-India civil nuclear agreement. In contrast, Russian and French firms, whose home governments underwrite accident liabilities, have been able to proceed with projects in India.

The draft legislation also proposes a reduced liability cap of $58 million for small reactor operators, though the existing cap of $175 million for large operators is expected to remain unchanged, the sources said.

India’s ambitious net-zero goals and growing energy demands are prompting a strong push for cleaner power sources. As part of this strategy, New Delhi is planning to open the nuclear sector to private Indian corporations, allowing them to build and operate nuclear power plants — a privilege previously reserved for state-run entities.

Leading Indian conglomerates — including Reliance Industries, Tata Power, Adani Power, and Vedanta Ltd — have reportedly engaged in preliminary talks with the government to explore nuclear investments worth around $5.14 billion each.

By Tamilla Hasanova