Nuclear Deal

India proposed the creation of a ‘India Nuclear Insurance Pool‘ in its agreement with the USA regarding nuclear liability law. Examine why has India proposed this insurance pool and its nature and benefits. (150 Words)

With the 1984 Bhopal gas tragedy still fresh in India’s mind, parliament passed Civil  nuclear Liability Act that makes equipment suppliers ultimately responsible for an accident, a deviation from international norms that the companies found hard to swallow.
India and Washington first reached a nuclear deal in 2006 allowing New Delhi access to nuclear technology and fuel without giving up its weapons programme. But the liability issue blocked progress.
As a solution to this, The India nuclear insurance pool is a risk transfer mechanism instituted to facilitate negotiations between the operator and the supplier concerning a right of recourse by providing a source of funds through a market based mechanism to compensate third parties for nuclear damage.
General Insurance Company and four other PSU insurance companies will together contribute Rs 750 crore to the pool. The government will contribute the remaining Rs 750 to build the initial pool of Rs 1500 crore. Since the operator is primarily liable, the pool will cover the operator and suppliers.
There will be three kinds of insurance products offered – one, for operators, another for turnkey suppliers, and a third for all other suppliers. This has been crafted specifically keeping Indian companies in mind.
Benefits of the pool:
  1. The risks will be shared between operators and suppliers.
  2. Majority of the liability is covered by the insurance pool.
  3. India will be able to access a pool of international funds once it ratifies the CSC.
  4. Operators and suppliers instead of seeing each other as litigating adversaries will see each other as partners managing a risk together.
  5. Would promote other countries to make similar investments in India
  6. Will benefit tax payers in the long run
This is a milestone for civil nuclear energy and Indo-US partnership and a right step which seeks to achieve the motive of the Civil Nuclear Liability Act.
Why India-USA Nuclear Deal is not be a good deal for India?
  • US reactors are costly. Even US itself has rejected Westinghouse AP 1000 reactors due to their high cost. Building 6 reactors will cost Rs 4 lakh crore and electricity tariff will be around Rs 25 which is too high.
  • The government has ratified the “Convention on Supplementary Compensation” (CSC) for Nuclear Damage that contradicts India’s domestic liability law and protects nuclear suppliers from liability for an accident.
  • India may get NSG membership because of USA’s push in return of this deal. But NSG membership is irrelevant for India’s energy issues. NSG membership may additionally allow India to acquire enrichment and reprocessing technology. However, since India’s indigenous heavy water reactors do not use enriched uranium and imported light water reactors come with associated fuel contracts, this technology has little significance for India’s electricity sector



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