A civil nuclear agreement between India and United States in 2008 ended New Delhi's isolation in global atomic commerce and opened up its state-controlled nuclear power market to foreign firms.
But the deal could not be implemented until India put in place a compensation regime that limited the liability of private companies, especially those from the United States, in the event of an industrial accident.
So India framed the Civil Liability for Nuclear Damage Bill 2010, which stipulates the compensation burden on the state-run reactor operator, the liability of the federal government and the responsibility of private suppliers and contractors. WHY IS THE BILL IMPORTANT?
The bill is important for private companies whose liabilities are not underwritten by their governments, as is done by the governments of Russia and France. Compensation claims from one nuclear accident could be enough to bankrupt a private company. Firms are reluctant to enter the Indian market despite its size until there is some clarity on compensation in case of an accident. WHY IS THE BILL CONTROVERSIAL?
Critics say the original draft law pegged the compensation liability of the operator too low -- at about $110 million, almost 23 times less than that of an operator in the United States.
It also did not hold private suppliers liable, opening a debate on whether the government was allowing them to get off easily in case of an accident.