India is preparing to amend its nuclear liability legislation to cap accident-related penalties for equipment suppliers, in a bid to revive stalled foreign investment in its nuclear sector, particularly from US firms. According to three government sources cited by Reuters, the proposed changes would remove a key clause in the 2010 Civil Liability for Nuclear Damage Act that exposes suppliers to unlimited liability in the event of an accident. This law was introduced after the 1984 Bhopal gas tragedy.
This was hinted by External Affairs Minister S Jaishankar earlier this month. Speaking at the Carnegie Global Technology Summit 2025 in New Delhi Jaishankar acknowledged the need to revisit the liability law. “The current law has not instilled confidence in the international nuclear industry,” he said, while also highlighting strong private sector interest in entering the field.
Draft law proposes compensation cap and time limit
As per the Reuters report, a draft law prepared by the Department of Atomic Energy proposes capping the compensation that operators can claim from suppliers at the value of the original contract, with a specific time period for such claims also being introduced. This stands in contrast to the existing law, which imposes no ceiling on compensation or liability duration.
Law change to encourage US participation
The proposed amendments come as part of Prime Minister Narendra Modi’s push to scale up nuclear power generation twelve fold — to 100 gigawatts by 2047. It also intended to bring India in line with international norms, where safety responsibility primarily lies with the operator rather than the supplier. It’s a move expected to open the door for companies like General Electric and Westinghouse Electric, which have so far stayed away from India’s nuclear market due to legal exposure.
Parliamentary approval and trade deals
The law would require parliamentary approval and is likely to be introduced in the Monsoon Session in July.
The passage of the amended law is seen as pivotal not only for nuclear energy expansion but also for concluding a trade deal with the US that targets raising bilateral trade to $500 billion by 2030, up from $191 billion last year.
Private sector participation
The government is also exploring private Indian participation in nuclear energy projects. Large domestic conglomerates are reportedly in discussions to invest about $5.14 billion each into the sector.
Bhopal Gas Tragedy
The current law was influenced by the 1984 Bhopal gas tragedy, which led to strong public and political sentiment around corporate accountability. The 2010 legislation, introduced in that context, had effectively shut out Western firms from entering India’s nuclear sector and complicated bilateral ties despite a landmark civil nuclear deal signed with the US in 2008.
The Bhopal Gas Tragedy occurred on December 2–3, 1984, when a gas leak from a pesticide plant owned by Union Carbide India Limited (UCIL) released a toxic cloud of methyl isocyanate (MIC) gas. The leak, caused by a chemical reaction, affected nearby areas in Bhopal, killing around 3,000 people immediately and leading to 15,000–20,000 deaths from long-term effects. Over 500,000 people were exposed, many suffering from severe health issues like respiratory problems and birth defects.
The disaster also caused significant environmental contamination, affecting water and soil. Legal battles ensued, with Union Carbide Corporation (UCC), the American parent company, settling with the Indian government for $470 million in 1989, a sum criticised as insufficient. In 2001, Dow Chemical acquired Union Carbide. The incident is still considered the world’s worst industrial disaster.
Source: Business Standard
