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Indo-US Nuclear Deal

According to C Rajamohan, Indo US civil nuclear agreement is not just a commercial agreement but an agreement with huge geopolitical significance. It is above all the recognition of India as a major power, it legitimizes India’s nuclear weapons, it establishes India as a responsible player in international politics.

What is the agreement?

It ends nuclear apartheid against India. The apartheid was created by USA. It was reaction against Pokhran I. USA had established NSG to prohibit nuclear commerce with India. USA had also set up MTCR (Missile Technology Control Regime) to check that India does not develop the launching capacity. Indian organizations like ISRO, DRDO were under the entity list prohibiting commerce with international community. It was because of USA’s policies India could not develop its 3 phase nuclear program, to make it commercially viable. Though India could develop some indigenous technologies, but failed to develop some sophisticated technologies. Throughout cold war, India and USA were in opposite leagues. Since Indian economy was inward economy, the sole focus of USA’s South Asia policy was preventing nuclear proliferation. Thus pressurizing India to sign NPT.

What is special about the deal?

USA walked extra mile to make India US partnership truly strategic. The biggest achievement of Indo-US strategic partnership. It also shows the qualitative change that has come in the relations.

What USA promised?
1] Full civil nuclear cooperation including the transfer of technology, that includes reprocessing technology.
2] USA will make serious efforts to bring India in all arms control regimes like NSG, MTCR etc.
3] USA will bring changes in the domestic laws.
4] USA will get India specific waiver from NSG guidelines.

What were India’s obligations?
1] India will continue moratorium on further testing.
2] India will work with USA to bring FMCT in existence.
3] India will sign ‘facility specific safeguard agreement’ with IAEA.  [Under NPT, non nuclear weapon states have to sign comprehensive safeguard. i.e. All of their nuclear facilities under IAEA inspection regime. What is special about India? Only civilian …. ]
4] India will sign convention on supplementary compensation (CSC). It is to set the guidelines for nuclear commerce, especially the liability laws.

Signing the compensation allows country, access to global financial institutions for the purpose of nuclear commerce.
India will bring the liability law which will fix ‘the civil liabilities’ in case of nuclear damages.

From India’s side, all the obligations were fulfilled but there was objection of USA with respect to section 17 and section 46 of Indian liability law.

What is section 17?

Right to recourse. In case of nuclear tragedy, operator will pay a liability to the people, after that it can ask the compensation from the supplier.
In above case, suppliers are the American corporates. Why USA had objection? Indian law applies for all countries. Other countries like Russia and France didn’t had objection. Why USA had objection? 1. In Russia, the exporter is Govt., whereas in case of USA, exporters are private parties. Hence they may not be able to bear the expenses.  2. Russians are confident about their nuclear reactors, safest and tested. USAs nuclear reactors are not tested.  3. According to USA, Indian law is not in accordance to global norms. India follows ‘strict and no fault liability’. It means there will be no excuse in case of accident. The only excuse is in two situations. 1_Accident because of civil war.  2_Accident because of attack by hostile state. 
Total amount of liability – 300 mn SDRs. 1 SDR is roughtly equal to 87 rs. Thus total liabilities will be Rs. 2610 crores. How much supplies has to pay? Out of this amount, Rs 1500 crores is the maximum amount which operator will pay (govt. of India). Rest will be paid by Govt. of India.
Rs 1500 crore paid by Indian operator will have recourse from supplier.
Prime Minister Modi entered into another deal to resolve the issue. Modi govt. proposed Insurance mechanism. At present, GICRe will be the insurance agency. Govt. of India will contribute the initial fund of 750 crores. Both suppliers and operator will take insurance policy and they will pay the premiums.

Section 46 of ‘Liability law’.

This was bigger concern for USA. So far the dispute has not been resolved.  Section 46 suggests that there will be liabilities other than civil liabilities. e.g. Liability under any other law, criminal law, tort law. USA has objection that the liabilities should not go beyond civil liabilities. During Obama’s visit in 2015, Prime Minister Modi gave explanation that section 46 does not apply to suppliers.

Views of legal experts.
Whether sec. 46 will apply or not will depend upon how Supreme Court interpret the provision.

What was the basis of Modi’s explanation? He referred to the debate in Indian parliament over the liability law. When bill was debated, one of the member proposed that section 46 should include the liability of supplier clearly. This amendment was not accepted in the parliament.
* Non acceptance of the amendment does not mean that section 46 excludes suppliers. It can be interpreted to include suppliers. Amendment was defeated not because amendment was wrong but because it lacked the majority.

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