Indian parliament introduces liability bill that would allow U.S. companies to set up reactors

By Rama Lakshmi
Washington Post Foreign Service
Friday, May 7, 2010; 11:12 AM

NEW DELHI -- A controversial law to establish a compensation system for nuclear accidents -- a key step to allowing American companies to set up reactors in India -- was introduced in parliament Friday, as opposition lawmakers accused the government of favoring U.S. and business interests over the rights of the people.

Opponents chanted "shame, shame" as minister of science and technology Prithviraj Chavan moved the Civil Liability for Nuclear Damage Bill in the lower house of parliament. They then left the chamber in protest.

"We tried our best to bring changes to this bill, but because of the stubborn attitude of this government, we have decided to walk out," said Sushma Swaraj, a member of the main opposition Bharatiya Janata Party. Other members called the bill "illegal" and "unconstitutional" and accused the government of acting under American pressure.

The opposition lawmakers said the bill takes away victims' right to bring compensation claims to court in the event of a nuclear mishap.

The bill, which has been the subject of heated debate for months in India, seeks to place the burden of damages solely on the nuclear plant operator and not on suppliers of equipment. It is controversial for Indians because it renews troubling memories of compensation battles in the aftermath of a poisonous gas leak from the Union Carbide factory in Bhopal in 1984.

The liability legislation is one of the last steps needed to fully activate a landmark civilian nuclear agreement between India and the United States that will allow American companies to set up reactors in India.

The 2008 nuclear accord allows India to access global nuclear technology and fuel supplies after more than three decades of international boycott, following the Indian atomic test in 1974.

With the help of American, French and Russian nuclear companies, India hopes to fortify its power-starved emerging economy by generating 63,000 megawatts of nuclear power by 2030 -- up from 1,700 megawatts currently. Tens of thousands of jobs would be created in both India and the United States, proponents say, generating business worth more than $100 billion.

But India, a nuclear power for more than 30 years, has no legislation to cover claims in the event of a nuclear accident. A government official said that 416 of the 436 nuclear installations in the world are covered by liability laws. The exceptions are the 18 installations in India and two in its neighbor and rival, Pakistan.

Until India passes a liability law, American companies such as GE and Westinghouse cannot begin operations there, even though two sites have been set aside for nuclear plants supported by American technology.

"There is a strong and persuasive case to have a law that underwrites the compensation liability if a nuclear accident occurs," said Manish Tiwari, a member of parliament for the ruling Congress party. "Companies will need insurance for setting up nuclear reactors, so the law makes clear the compensation liability. Without insurance, the companies cannot pay the victims of a disaster."

Critics of the bill say that it places legal liability for mishaps on the state-run operator of the plant, the Nuclear Power Corp. of India, and not on the private suppliers and contractors -- many of which would be foreign companies. The bill places a compensation cap of $100 million on the state-run operator and allows compensation directly from the Indian government of up to $450 million.

"What kind of a joke is this? If we are the victims of an accident, our tax money will be used to pay us compensation. Why should we shield the foreign suppliers of equipment?" said Murli Manohar Joshi, a member of parliament with the main opposition Bharatiya Janata Party, said at a recent meeting. "This is not America, this is not Russia. In India, the density of population is very high. The impact of a nuclear accident would be enormous."

Chavan defended the bill last month by saying that the cap is an assured amount that relieves the victims of the arduous task of proving negligence.

"There will be thousands of suppliers to a nuclear plant. If the victims have to go after each and every supplier, they will never get compensation," Chavan said. "This bill is a single-window system of compensation."

Some critics say the cap is too low. Others say there should be no cap on compensation at all. "Shielding the nuclear industry from the economic consequences of nuclear accident reduces the incentive to pursue highest levels of safety in the plant," said Samit Aich, executive director of Greenpeace India.

After Friday's walkout, a government official said that the government may agree to defer voting and refer the bill to a review committee of lawmakers.

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