NEW DELHI — On a visit to India, the U.S. energy secretary has said that India needs to resolve a contentious civil nuclear liability law which is hampering investment in the country’s fast-growing nuclear energy sector. His visit is part of efforts to pick up a dialogue interrupted by a recent diplomatic dispute.
After holding talks with Indian officials on energy issues in New Delhi on Tuesday, American Energy Secretary Ernest Moniz said that India needs to align its nuclear liability law with an international convention on compensation which is due to come into force this year.
“Resolving this convention is important for all companies, including Indian companies and resolving that is an enabler to reach the goal of nuclear power as a major part of the energy future,” he said.
A landmark 2008 agreement with the U.S. led to the lifting of a decades-long ban on international nuclear trade with India. It was expected to help India ramp up nuclear power generation.
However, a stringent liability clause adopted under pressure from activists and the opposition has hampered those efforts.
Foreign companies are concerned that this law disproportionately burdens suppliers of nuclear equipment with payments in case of an accident. And American companies are disgruntled that more than five years after the U.S. facilitated the deal, they have not reaped the benefits they had hoped for.
The only deal India has signed with an American company is a preliminary contract with Westinghouse Electric.
The issue is clouding bilateral ties.
But the Indian official who led the energy dialogue, Montek Singh Ahluwalia, is optimistic that a solution can be found.
“It is true that it is not only the United States that has raised this issue. Other partners with whom we want to pursue nuclear cooperation have similar concerns. We are hopeful that within the existing framework of the civil nuclear liability act it should be possible to resolve these problems. And this would be relevant not just for U.S. suppliers, it would be relevant for Canadian suppliers, French suppliers, and also Indian suppliers,” said Ahluwalia.
Moniz will hold more talks in Mumbai on Wednesday on the nuclear energy issue.
The energy dialogue is important as the U.S. seeks to expand its market for renewable energy technologies. India, with suffers from massive power shortages, has huge potential.
However, nuclear energy is not the only area where the two countries have differences. They have also clashed over India’s expanding solar energy market. The U.S. complains that India is discriminating against American suppliers by mandating domestic content requirements for solar suppliers and has taken the dispute to the World Trade Organization.
Moniz explained the U.S. position.
“Our view fundamentally in the end is that to both grow the sector and to ultimately establish a strong and competitive manufacturing lies in building the market,” he said.
Moniz told Indian industry that investment on clean energy is estimated at $36 trillion worldwide in the next four decades and is a huge opportunity for the private sector.
Moniz is the second high-ranking American official to come to India since a spat over an Indian diplomat’s arrest in New York frayed their ties. He was earlier scheduled to come in January but the visit was postponed due to the dispute. The visits are part of efforts to put the bilateral relationship back on track.