US-India Civil Nuclear Deal and its Evolution

Syllabus: Prelims Unit I - General Science

Historical Background

• In 2008, the US Congress approved the US-India Civil Nuclear Deal, supported by a coalition of businesses, Indian-Americans, and academics.
• The legislative process for the deal began in 2005.
• The deal faced opposition, particularly regarding concerns about nuclear weapons proliferation.

Strategic Significance

• The deal marked a watershed moment in US-India relations, fostering a new era in defence and strategic cooperation.
• It enhanced trust between the two democracies, which had been estranged during the Cold War.
• The cooperation extended to the following areas:
• Defence purchases and manufacturing
• Military exercises
• Technology transfer
• Intelligence sharing
• Crisis management

Unfulfilled Promises

• The energy and commercial aspects of the deal remain unrealized.
• The original vision included:
• Expansion of India's civil nuclear sector
• Construction of multiple plants using US equipment
• Job creation in both countries
• Increased electricity generation
• Reduction in greenhouse gas emissions
• Westinghouse's plan in 2016 to build six new nuclear plants has not been executed.

Entity List Complications

• Initially, 200 Indian entities were placed on the US Department of Commerce "Entity List," which restricted US companies from doing business with these entities.
• Post-deal, most nuclear-related Indian companies were removed from the list.
• The remaining entities are primarily involved in research and development.
• Concerns about the leakage of technology for military use and to US adversaries persist.

Liability Risk Challenges

• India's Civil Liability for Nuclear Damage Act (2010) deviated from international norms, placing major liability on suppliers instead of operators.
• US suppliers like GE and Westinghouse were unwilling to assume the risks involved.
• The Indian government attempted to offer relief through an insurance premium system.
• Russia accepted the liability risk, owing to sovereign immunity and government protection.

Current Challenges

• Technological evolution and cost considerations remain major challenges.
• Indian consumers' need for reasonable pricing and concerns about cost overruns.
• Potential impact on electricity rates and regulatory hurdles.
• A comprehensive approach involving both governments is required for progress.