Union Budget 2025 | Modi government to amend liability law that made US company hesitant to build nuke power plant in India

India's decision to set up a 'Nuclear Energy Mission' with an outlay of Rs 20,000 crore and plans to amend the nuclear liability laws were announced by Finance Minister Nirmala Sitharaman while presenting the Union budget for 2025-26 in Parliament.

New Delhi: To persuade private industries to take part in the mission to develop 100 GW of atomic energy generation capacity in the country by 2047, Prime Minister Narendra Modi’s government is set to amend a 2010 Act which remained a hurdle in the commercial implementation of India’s landmark civil nuclear cooperation agreement with the United States.

The government will also launch a Nuclear Energy Mission with the focus on research and development of Small Modular Reactors.

The government will amend the Civil Liability for Nuclear Damage Act (CLND Act), 2010, which over the past 15 years remained a sticking point for the negotiation between New Delhi and Westinghouse Electric Company LLC of the United States for setting up a 6000 MWe atomic power plant at Kovvada in Andhra Pradesh. Not only the CLND Act, the Atomic Energy Act of 1962 will also be amended.

“Development of at least 100 GW of nuclear energy by 2047 is essential for our energy transition efforts,” Finance Minister Nirmala Sitharaman said while presenting the Union Budget 2025-26 on Saturday. “For an active partnership with the private sector towards this goal, amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act will be taken up,” she told the Lok Sabha.

Her statement signalled a departure from the stand of the Modi Government, which had in 2015 sought to address the concerns of the US over the CLND Act of India but categorically stated that it had no plan to amend the Act.

The landmark October 2008 deal set the stage for civil nuclear cooperation between India and the US. The discussion with the WEC to build an atomic power plant in India, however, could not make progress due to concerns of the US company over Section 17(b) and Section 46 of the CLND Act 2010. The financial crisis that hit the WEC in 2017 also slowed down the negotiation. The NPCIL acquired 2079.66 acres of land at Kovvda in Andhra Pradesh for the nuclear power plant. The WEC, however, has not yet submitted the techno-commercial offer.

Section 17(b) of the CLND Act, 2010, allows the operator of a nuclear plant to claim damages from suppliers in case a mishap occurs due to a “patent or latent defect” in the equipment supplied or due to sub-standard services. The WEC has been arguing that the provision of the particular section of the legislation is contrary to the global norm, where all liability is channelled to the operator. The US company argued that Section 17(b) and Section 46 of the Act would expose them to unlimited liability.

The opposition Congress alleged that the Bharatiya Janata Party had sabotaged the CLND Act, 2010 when Manmohan Singh was the prime minister of the United Progressive Alliance government.

“The BJP led by Arun Jaitley successfully sabotaged the Civil Liability for Nuclear Damage Act, 2010 that international companies wanted when Dr Manmohan Singh was PM,” Congress’s general secretary, Jairam Ramesh, posted on X “Now to appease (US President) Mr. (Donald) Trump, the FM announces that the Act will be amended.”

Just a few days before Trump returned to the White House as the 47th American president, his predecessor Joe Biden removed restrictions on three entities of India to clear the way for the 2008 civil nuclear cooperation agreement.

Sitharaman on Saturday also said that the Nuclear Energy Mission to be launched by the government with an outlay of Rs 20000 crore would aim at operationalising at least five indigenously developed small and medium reactors by 2033.

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Union Budget 2025 | Nirmala Sitharaman, as Finance Minister, presented her record 8th Union Budget this time. While inflation has burnt a hole in the pockets of 'aam janata', the Modi govt gave income tax relief for those making up to Rs 12 lakh per year in salaried income. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.