An obviously chagrined United States-India Business Council, which has lobbied feverishly for the passage of the US-India civilian nuclear deal in the US Congress, on Monday issued a guarded reaction to the passage of the nuclear liability bill by Indian Parliament stating that it had 'compromised on the indemnity clause demanded by American companies to protect it from liability in case of a nuclear accident.'
It said this was the only way US suppliers of nuclear reactors and other technology would enjoy a level playing field against state-supported suppliers.
The USIBC said in a statement issued on Monday that it was 'reviewing the legislation passed by the Indian Parliament concerning civil nuclear liability.'
'We have taken a position from the outset that is consistent with the position stated publicly by India's nuclear operator, the Nuclear Power Corporation of India, and supported by major Indian business associations and commercial nuclear suppliers -- that absolute and exclusive liability must be channeled to operators of nuclear power plants, and that a sole remedy must be established for compensation of claims,' it said.
The statement argued that 'these principles are basic to international best practices as reflected in the International Atomic Energy Agency's Convention on Supplementary Compensation,' and noted that 'virtually all other countries around the world with civilian nuclear programmes have adopted such legislation to provide protection to their citizens, while facilitating nuclear commerce.'
The USIBC said, 'A nuclear liability regime consistent with the CSC will safeguard the Indian public interest by delivering swift, certain and adequate compensation in the unlikely event of an accident. It will also attract to India the most responsible international suppliers, and integrate Indian industry into the global commercial nuclear supply chain.'
The statement warned that 'the absence of an effective, CSC-compliant liability regime could preclude involvement by the private sector -- both Indian and foreign -- and stymie India's multi-year effort to develop civil nuclear power.'
The USIBC reiterated, 'We will seek clarification from the Government of India on whether and how Indian and foreign suppliers can move forward with the NPCIL to vitalize India's nuclear power sector.'
Senior USIBC officials contacted by rediff.com declined to comment on the record and said the statement speaks for itself and did not want to go beyond it, but pointed to the position adopted by NPC that essentially any language that shifted liability to the suppliers and not wholly hold the operator responsible would preclude both foreign and domestic companies from investing in India's civilian nuclear energy sector.
Several analysts predicted that the bill in its current form would preclude India from signing contracts with any supplier and scoffed at the comments of the likes of Bharatiya Janata Party leaders Arun Jaitley that India was 'a buyer's market' and foreign firms would flock to invest in India's nuclear energy market.
One analyst said, "The Nuclear Power Corporation of India is not just any ordinary entity, but the only customer that every supplier in the world has in India and they know their suppliers better than anyone else."
Thus, according to the analyst, the bill that had been approved in Parliament after the Manmohan Singh government acquiesced to the demands of the BJP and other parties -- whose arguments were buoyed after the Bhopal disaster of 1984 and corporate and multinational irresponsibility and callousness precipitated to the surface once again following a recent judgment -- was the bill the NPCI had been commenting on.
The analyst said the comments of the likes of Jaitley and Prithviraj Chavan, that India was 'a buyer's market' and even though the bill that was passed passes on some of the liability to the supplier from the operator would still attract foreign investment, was flawed "because they have no idea about the signing of commercial nuclear contracts," and the ramifications of this bill that would leave American entities that would have to try and cover their liability with massive insurance, at a distinct disadvantage over State-supported entities.
Another analyst said the very fact that the NPC had advised the Government of India not to give a right of recourse to its suppliers when ordinarily one would be urging the right of recourse authority because that would give them leverage and a bargaining power in negotiations, "really does say something, because essentially the message was that if it had this right of recourse, it would eschew their doing business with any supplier -- both foreign as well as domestic entities."
These analysts said one would expect American companies to now be perusing this bill with a fine toothcomb with their legal analysts with regard to investing in India's nuclear energy sector with the current liability clause and remaining competitive with State-supported suppliers, now that they were deprived of a level playing field.
One analyst said, "If I were advising these companies, it would be a no-brainer in that they not sign any contract with this kind of a liability regime."
