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India Defers Introduction of Civil Nuclear Liability Bill

The Indian government has deferred the introduction of a bill considered crucial for American companies to tap into India's nuclear power market. The legislation seeks to limit the liabilities of companies establishing nuclear power plants in India, but has been slammed by opposition parties.

The Civil Nuclear Liability Bill was to be introduced in parliament Monday, but the Speaker announced that the government has changed its mind.

Political analysts say the bill was deferred because its passage may not be easy with main opposition parties vowing to block it.

The legislation will cap the liability of foreign companies at about $450 million in the event of an accident at a nuclear power plant. It would also make the operator and not the supplier liable for these damages.

The government says without this key legislation, foreign companies will hesitate investing in India 's civil nuclear field.

A landmark 2008 deal between India and the United States ended three decades of sanctions imposed on New Delhi for conducting nuclear tests, and opened the door for India to get civil nuclear technology. Since then American, Russian and French companies have been lining up to establish nuclear power reactors in the energy-starved country.

However until the Civil Nuclear Liability Bill is cleared, American companies are at a competitive disadvantage. This is because American companies are privately owned, while French and Russian companies are fully or partly state owned, and their accident liability is underwritten by their governments.

But critics in India have slammed the bill. A top leader of the Bharatiya Janata Party, Ravi Shankar Prasad, says the cap on compensation at $450 million is too low.

"Therefore, the cost of the life of an Indian is too cheap," said Prasad.

The issue is especially sensitive in a country that experienced one of the world's worst industrial disasters in 1984, when a gas leak in a Union Carbide factory in the city of Bhopal killed an estimated 8000 people. The Indian government was severely criticized for accepting what was called a "paltry compensation" of about $470 million for the victims.

Opposition parties are also angry that the responsibility for doling out compensation will rest on the operator - likely to be India 's state owned nuclear corporation - and not the foreign companies building the power plants.

Minister Prithviraj Chavan in the prime minister's office defends the bill, and says it has been drafted in line with international norms.

"We just want to become part of international regime, now that we have been allowed to participate in international civil nuclear commerce and trade," said Chavan.

The government wants to have the bill passed before a possible visit by President Obama to India later this year.