Until recently, India has faced some major obstacles in implementing a nuclear power program. India’s refusal to accede to international nuclear non-proliferation rules meant that for many years foreign technology suppliers could not do business with the country. All of this changed with the US-India nuclear deal in 2007 and a special waiver that India received from the multilateral Nuclear Suppliers Group (NSG) in 2008. India has now reached agreements with Russia and France to build new plants. But US and Japanese suppliers also play an important part in India’s plans for both technical and competitive reasons.
How might the Japanese crisis affect India’s plans? As one would expect, environmental groups are using Fukushima to call for the cancellation of India’s nuclear program. But the green lobby has far less political influence in India than in Western countries, and the Indian government has sought to reassure the public of the safety of existing and planned nuclear plants. A safety review has been announced that will no doubt conclude that all is well. (The AERB, India’s nuclear regulator, is not independent of the government.) But the Japanese crisis will still have a major impact on the Indian nuclear power program for two reasons: the first is Japan’s nuclear non-proliferation policies and the second is legal liability.
Japan’s nuclear non-proliferation policies are a significant obstacle for India’s plans. The Japanese government approved the waiver for India in the NSG in 2008 allowing other countries to supply nuclear technology to India. But Japan continues the ban on supply of Japanese nuclear technology to India because India has not signed the Nuclear Non-Proliferation Treaty (NPT) or the Comprehensive Nuclear Test Ban Treaty (CTBT). In practice, this ban not only prevents Japanese companies from working in India but may also make it very difficult for major US suppliers, such as General Electric and Westinghouse, which are either owned by or in joint ventures with Japanese companies and rely upon Japanese technology for their products.
Japan and India have been in negotiations since 2010 over the possible relaxation of Japan’s policies. Although this is supported by the powerful Japanese Ministry of Economy Trade and Industry, nuclear deals with countries that have not signed up to the NPT or CTBT, even a friendly country such as India, remain extremely politically controversial in Japan. It is likely that any policy change — at least in the short term — will become politically impossible for the Japanese government in the wake of the nuclear crisis.
The second problem is legal liability. Most suppliers will only agree to supply nuclear technology if their liability is limited in case of an accident, and it is normal for countries to limit the potential liability of foreign suppliers of nuclear technology. But limiting the liability of foreign companies is particularly controversial in India, which has terrible memories of the Bhopal chemical disaster of 1984. According to some estimates, this killed up to 15,000 people and injured another 550,000. Many believe that Union Carbide, a US company, managed to avoid most of the legal responsibility for the disaster.
Most countries that use civilian nuclear technology are party to one or other of the international treaties that limit liability for nuclear damage. India has signed (but not ratified) the Convention on Supplementary Compensation for Nuclear Damage, although this treaty has not yet entered into effect. In August 2010, the Indian Parliament also passed a law on Civil Liability for Nuclear Damage. While this was initially intended to limit the liability of nuclear technology suppliers, before it was approved the law was changed to make reactor suppliers, in addition to operators, liable for damages caused by an accident.
US nuclear suppliers have stated that they are not willing to do business in India without an acceptable conclusion on liability. Areva, the French nuclear company that won the bid to construct two reactors south of Mumbai is also not willing to commence construction without clarification of this issue. Atomstroyexport, the Russian nuclear supplier which is constructing a nuclear reactor in Kudankulam, is also worried. It thought it had special protection from any liability under an agreement with India which ultimately dates back to Soviet times. But it has now become nervous that the new Indian law will make them liable on new projects such as a proposed project in Haripur.
All of this places big question marks over India’s nuclear program. India will clearly need to do without Japanese nuclear technology for some time to come. The Fukushima crisis also probably makes an amendment to the Indian nuclear liability law all but politically impossible. India could change its plans and try to find other suppliers of nuclear technology that are willing to take liability risk. But finding reputable suppliers that are willing to take that risk now seems pretty unlikely in the post-Fukushima world. Even if the Indian government finds a way to effectively by-pass the new liability law in a way that is acceptable to foreign technology suppliers, the government could be exposed to severe criticism from both the nationalist left and the nationalist right.
The resolution of these problems has a long way to go. The big question is likely to be: what price is the Singh government willing to pay for nuclear power?
David Brewster is a Visiting Fellow at the Strategic and Defence Studies Centre, Australian National University.