India: Civil Nuclear Energy Initiatives – Analysis

By Niharika Tagotra*

In July 2014, months after the NDA government returned to power, PM Narendra Modi visited the Bhabha Atomic Research Centre (BARC) in Mumbai and declared that nuclear power would be an essential part of India’s energy security. The initiatives taken in this regard by the current government are reflective of this intent. While most of these initiatives are a continuation of the previous government’s policy push in the nuclear energy sector, many other initiatives undertaken by the current regime go a step further. It is however important to note that the present government remains conspicuously silent on issues such as improving regulation and transparency in the nuclear sector, and no major policy break from the previous government can be identified in the issue area.

PM Modi’s Nuclear Diplomacy

Continuing with the nuclear diplomacy that was initiated by the previous UPA government, PM Modi has signed civil nuclear deals with over ten countries. Of these, the India-US and India-Japan nuclear agreements were quite significant because they removed some significant bottlenecks in the fuel and technology imports for the sector.

Under the India-US nuclear agreement signed in January 2015 during President Obama’s visit to India, the two countries were able to reach an understanding on the issue of civil nuclear liability. The India side agreed to set up a nuclear insurance pool to the tune of INR 1500 crore under the Civil Liability for Nuclear Damage Act (CLNDA), which was fundamental in assuaging the concerns of foreign and domestic investors regarding the issue of liability in the nuclear sector.

This removed a major bottleneck for private companies and the visit subsequently saw the initiation of commercial negotiations between Westinghouse and the Nuclear Power Corporation of India (NPCIL). The personal bonhomie between US President Barack Obama and PM Modi is said to have played an important role in the matter – both leaders circumvented domestic political opposition and were able to ultimately forge a consensus on the liability issue.

The India-France nuclear deal signed in 2010 was again a legacy of the UPA government inherited by the Modi government. The deal had been stuck in limbo because the reactor vessels used by Areva were sourced from Japan and in the absence of an India-Japan civil nuclear arrangement, the supply of these vessels was not possible. A permanent resolution to the issue was achieved in December 2015 when India and Japan signed a landmark civil nuclear agreement, bringing six years of negotiations to a successful end. This was a significant exception for India as it became the only non-NPT country to sign a nuclear deal with Japan. While the agreements did see a long drawn process of negotiations between the countries – a period that spanned the regimes of both the UPA and the NDA – diplomatic efforts led by Modi himself and his emphasis on forging deep personal engagements with the leaders were fundamental in the successful culmination of most of these negotiations.

PM Modi’s efforts at using diplomacy to secure nuclear deals however suffered a setback when India’s diplomatic push for securing a membership to the Nuclear Suppliers Group (NSG) hit a roadblock. A major opposition to India’s bid came from China and a group of other countries including Ireland, Austria and New Zealand. While, the benefits from NSG membership for the domestic nuclear energy sector is debatable, there is no doubt that the failure at achieving its intended goal caused India some major diplomatic embarrassment.

Policy Push for Nuclear Power

Besides the diplomatic overtures, certain important initiatives have also been taken at the domestic front to streamline the flow of investments to the sector. The push for the ratification of the Convention on Supplementary Compensation (CSC) for nuclear damage in February 2016 was a step in this regard. While the convention was signed in 2010, its ratification saw a delay of six years owing to the government’s lack of political will. The ratification of the agreement in 2016 reflected the intent of the current government to implement and abide by the convention in its entirety.

The government has also attempted to alleviate concerns regarding the provision of sufficient investment to the sector by announcing a yearly budgetary allocation of INR 3000 crore to nuclear energy for the next two decades. Making the announcement during his 2016 budget speech, Finance Minister Arun Jaitley categorically stated that the government was looking at nuclear energy as the power source for long-term stability. Recently, the government announced the plan for setting up of ten indigenously developed Pressurized Heavy Water Reactors (PHWRs), an initiative that is expected to fast-track India’s nuclear power programme and provide the much needed push to the domestic nuclear industry by generating manufacturing orders to the tune of INR 70,000 crore and creating over 33,400 jobs in the country. The units, developed in fleet mode, will be one of the flagship ‘Make in India’ projects, and will aim to link India’s nuclear power sector with the indigenous industrial capacities in high-end technologies.

Unaddressed Issues

With regard to nuclear energy, it is not just the economic and political realities that act as an obstacle but also the social mindset that stalls its development. The lack of transparency in the functioning of the sector is the primary cause for the trust deficit between the general public and the nuclear energy sector. The lack of information or misinformation about the sector adds to the distrust of nuclear power in a post-Fukushima world. Some fundamental long-pending reforms in this regard still remain unaddressed. The issue of increasing accountability in the sector – by increasing the regulatory powers of the Atomic Energy Regulatory Board (AERB) and making the atomic energy institution more accountable to the public – remains pending, while the Nuclear Safety and Regulatory Authority (NSRA) bill which lapsed in 2014 with the change of government is yet to be re-introduced in parliament. The continuing problems with the L1 system of procurement, which has been flagged by the private sector as the reason behind the never-ending delays in the construction of domestic power plants and spiralling costs, have also not been taken up.

Thus, while there is no doubt that the Modi government has undertaken some important steps to further the generation of nuclear energy, with PM Modi personally leading some diplomatic initiatives, the reluctance of the government to attend to some of the persistent issues in the sector is a major gap in the Modi government’s policy push for the nuclear sector.

* Niharika Tagotra
Researcher, IPCS