Perils of India’s Amended Civil Liability Nuclear Laws

Jonathan Swift famously said, ‘Laws are like cobwebs, which catch small flies, but let wasps and hornets break through.’ In the nuclear realm, India has taken a third course: setting the laws as it sees fit to work in its favour. India has, in effect, lived out Tacitus’s saying ‘The more corrupt the state, the more numerous the laws’. This reflects India’s pursuit of a nuclear illusion, evident in its plans to amend laws such as the Atomic Energy Act and the Civil Liability for Nuclear Damage Act. These laws, due to their restrictive provisions and disproportionate liability burdens on suppliers, had previously deterred private and foreign investment in the past. While this legal shift is touted as a breakthrough for the energy landscape, on the flip side, it carries deeper strategic implications.

The reforms within the legal framework aim to enhance private investments, facilitating technology transfer and revive civil nuclear cooperation under the Indo-US 123 Agreement. In parallel, with these amendments, the Indian Nuclear Energy Mission 2025 has also allocated $2.3 billion to develop five small modular reactors (SMRs) by 2033, another development that is potentially problematic, given India’s track record with nuclear theft. At the same time, the American company Holtec International has been authorised by the US DOE to share technical information related to its SMR-300 with Indian entities. New Delhi’s current legal and regulatory framework does not fully account for the private-sector’s involvement in nuclear related matters potentially leading to India’s next regulatory nightmare.

India has recently also announced its plans to outsource regulation from the Department of Energy (DOE) to the less experienced Ministry of Power. Now with three entities involved: the private partners, Ministry of Power and DOE, the unresolved gaps in liability also risks duplicative mandates, stripping away accountability and undermining safeguards against nuclear material diversion and technology proliferation. Compounding this issue is the fact that India lacks an independent nuclear regulatory authority despite being a signatory to the Convention on the Physical Protection of Nuclear Material and UNSCR 1540. This fragmented nuclear governance framework and institutional dysfunction undermines coherent oversight and raises critical concerns about the country’s ability to manage nuclear security.

The Nuclear Threat Initiative’s 2023 Nuclear Security Index ranked India twentieth out of twenty-two states, which showcases the low level of trust in New Delhi’s ability to keep its nuclear assets secure. Additionally, India’s troubling safety record since the 1990s, with recurring incidents of nuclear theft, smuggling, radioactive material leaks, cannot be ignored in this context. India’s plans to cultivate a “New Nuclear Normal,” backed by Washington compounded by its poor track record, highlights the risks of legitimising a parallel non-proliferation standard, with grave implications for the entire non-proliferation regime.

Augmenting these risks are India’s plans to develop five indigenous advanced SMRs in remote locations. Owing to their scalability, safety and efficiency, these SMRs have been hailed as a game changer. India promotes this advancement as part of its efforts to reduce carbon emissions and achieve net-zero targets. However, these SMRs pose yet another challenge to the verification regime- particularly due to their modular deployment potential.

The interest of private US companies in providing India with technical know-how on SMRs is another troubling aspect. The Indian Ministry of External Affairs has refused to disclose the scope of this “technical information,” prompting the questions of what it encompasses and how Washington will approach the transfer of these dual-use technologies. This development has also revived longstanding concerns over the opacity of the three streams of India’s nuclear program, particularly as the “civilian unsafeguarded” category includes reactors, uranium enrichment and reprocessing plants that are not under IAEA oversight, thus blurring the lines between civilian and military use. Given the historical precedent, when India diverted foreign supplied civil nuclear technology for its 1974 nuclear test, there is a clear cause for concern.

Amendments to the civil nuclear liability laws aim to attract private investment, both domestic and international, into various nuclear fields including the development of SMRs. However, regulatory shortcomings, accountability issues and safety concerns must be carefully considered when cooperating with India in the civil nuclear domain. In the high-stakes game of nuclear field, any oversight could lead to severe consequences. With amendments planned for these laws, India is not just moving the pieces, it is redrawing the board, effectively blurring the lines between cooperation, competition and quiet proliferation.