The Nuclear Liability Law

How India's 2010 nuclear liability law made foreign reactor suppliers hesitant, why liability rules matter for investment, and the push to reform them.

After the 2008 India-US nuclear deal, foreign companies were expected to build reactors in India. Few did.

The Civil Liability for Nuclear Damage Act, 2010

Operators are liable for accidents, with a cap.
Section 17(b) lets operators seek compensation from suppliers if faulty equipment caused an accident.

Why suppliers hesitated

Most international conventions place liability only on operators. Supplier liability created uncertain risk for companies like Westinghouse and GE, stalling projects such as Kovvada and Jaitapur.

The Bhopal shadow

The law reflected memories of the 1984 Bhopal gas disaster, where victims received limited compensation from Union Carbide.

Insurance pool

In 2015, India created a nuclear insurance pool to cover operators’ and suppliers’ liability, but hesitation persisted.

Reform

In 2025, the government announced plans to amend the liability law and the Atomic Energy Act to attract investment, including from private companies.

Economic lesson

Clear, predictable liability rules affect investment. Too little liability can risk public safety; too much or unclear liability can deter investment.

The stalled project

A foreign reactor maker signs agreements to build in India but won't finalise a contract until liability risks are clarified, leaving the project stalled for years.

Thinking the nuclear deal immediately brought foreign reactors

Liability concerns stalled most foreign projects.

Key takeaways

The 2010 liability law allowed claims against suppliers.
Foreign suppliers hesitated due to uncertain risk.
An insurance pool was created in 2015.
In 2025, India announced plans to reform nuclear laws.