Indo-US Nuclear Deal

In a landmark development, the United States (US) is set to remove long-standing regulations that have hindered civil nuclear cooperation between Indian nuclear entities and US companies. This incremental step, marks a significant stride in operationalising the Indo-US nuclear deal envisioned nearly two decades ago.

Key-highlights

• The Indo-US civilian nuclear deal, initiated in 2008 has remained largely unrealised. 
• The deal allowed India to engage in nuclear trade despite not being a signatory to the Non-Proliferation Treaty (NPT). 
• The agreement granted India access to nuclear fuel, reactors, and technology for civilian purposes while committing to the separation of its civilian and military nuclear programs under IAEA safeguards.
• Now, the US is finalising steps to remove Indian government entities such as the Bhabha Atomic Research Centre (BARC), Indira Gandhi Atomic Research Centre (IGCAR), and Indian Rare Earths Limited (IREL) from the US Entity List.
  • The US Entity List, maintained by the Bureau of Industry and Security (BIS) of the US Department of Commerce, restricts foreign individuals, businesses, and organizations deemed a potential threat to US national security or foreign policy interests. 

Key Legal Barriers to India-US Nuclear Civil Deal:

• US Legal Barrier – ‘10CFR810’ Authorization: Under Part 810 of Title 10, Code of Federal Regulations (10CFR810), the US Atomic Energy Act of 1954 regulates the export of nuclear technology and materials. This regulation allows US nuclear vendors to export equipment to countries like India, provided strict safeguards are followed. However, it restricts the manufacturing of nuclear equipment or involvement in nuclear design work in the recipient country (India in this case).
  • Implication for India: India aims to co-produce nuclear components and participate in the manufacturing value chain for atomic power projects. The 10CFR810 authorization limits this potential by not allowing Indian manufacturers to play a direct role in building and designing nuclear infrastructure. This is seen as a major impediment from India's perspective, as they seek to advance domestic manufacturing capabilities in nuclear technology.
• Indian Legal Barrier – Civil Liability for Nuclear Damage Act (2010): The Civil Liability for Nuclear Damage Act, 2010 was introduced by India to establish a legal framework for compensating victims of nuclear accidents, outlining procedures for liability and compensation. This act was intended to create a compensation mechanism for nuclear accidents, promoting safety and trust in nuclear energy.
  • Foreign Vendor Concerns: However, foreign nuclear suppliers (such as GE-Hitachi, Westinghouse, and Areva/Orano) have raised concerns that the act places liability for accidents on equipment suppliers, even if they are not directly responsible for the incident. This has led to hesitation among these companies to invest in India’s nuclear sector due to fears of incurring substantial future liability in case of accidents, potentially deterring investment in the country's nuclear energy projects.

Strategic Importance and the China Angle:

• The US-India initiative on Critical and Emerging Technologies (iCET) focuses on deepening cooperation on advanced technologies, including nuclear technology. This framework is seen as a possible pathway to resolving the legal barriers that currently exist between India and the US. A breakthrough agreement on iCET could pave the way for both countries to co-manufacture nuclear components and even jointly produce nuclear reactors in India, particularly small modular reactors (SMRs).
• India’s SMR Ambition: India is positioning itself as a manufacturing hub for SMRs, which are smaller, more cost-effective reactors with capacities ranging from 30MWe to 300MWe. These reactors are seen as an opportunity to address the growing global demand for nuclear power, especially in the Global South.
• China’s Position: China has also recognized the strategic importance of SMRs and is actively investing in the technology, positioning itself as a global leader in the small reactor space. Unlike larger reactors, where China has been a late entrant, SMRs offer a chance for China to compete in the emerging nuclear energy market. This competitive scenario places pressure on both India and the US to collaborate to maintain their technological edge and secure a strong foothold in the SMR market.

Technological Challenges for India:

• While India has a strong background in heavy water reactors (PHWRs), these reactors use natural uranium and are becoming increasingly outdated in comparison to the globally dominant light water reactors (LWRs). The challenge for India is to upgrade its reactor technology to align with international standards, primarily driven by the US, Russia, and France.
• LWR Technology: The US, Russia, and France are global leaders in LWR technology, which has become the preferred choice for modern nuclear power plants due to its efficiency and scalability. India’s push to enter the SMR market requires overcoming these technological constraints, and collaboration with the US could provide a pathway to overcome these hurdles.