The breakthrough in the Indo-US civilian nuclear deal announced on Sunday was the product of months of hard work that gained momentum ahead of PM Narendra Modi’s visit to the United States in September last year.
Sources familiar with the matter said that in the run-up to the visit, Modi had told National Security Advisor Ajit Doval and Indian Ambassador the United States S Jaishankar that operationalising the nuclear deal was top priority given the country’s hunger for cheap and clean power.
Modi is understood to have told President Obama on Sept 30 that if both of them “put everything in the nuclear deal” the matter would get sorted out. In that sense, the Indian leader was leveraging a fast-developing relationship with Obama to overcome hurdles to the deal.
Late last year, a contact group with Department of Atomic Energy, Ministry of External Affairs, Law and Justice and Finance was formed by the government to negotiate not only with the US government but also with the Indian suppliers like Larsen & Toubro and foreign suppliers like GE and Westinghouse to directly address their concerns. Top government sources said that Modi made it amply clear to Indian negotiators that there would be no change in the liability law and the solution had to be found within the law.
On Sunday, the Americans agreed to New Delhi’s proposal of setting up a Rs 1,500-crore “insurance pool” that will indemnify US suppliers in the event of an accident, and gave up on their demand of being able to track what happens to nuclear fuel they supply to India.
The Indian and the US nuclear negotiators had to work their way through three contentious issues. The first being clause 17 of the Act that allowed the right of recourse to operators against the supplier in case of a mishap, the second, clause 46 of the Act that stated that all other (unspecified) laws would also apply against the supplier in case of a mishap and third, the issue of administrative arrangements or flagging of US fuel. The last issue was raked up by the Obama administration despite being sorted out during negotiations of the 123 Agreement during President GeorgeW Bush’s term.
With the US government demanding changes in the liability law, there was hardly any negotiation or engagement by the UPA-I regime after 2012.
Indian nuclear negotiators told HT that work on the insurance pool to contain and manage the liability under India’s law began as early as August 2014 with an aim to bring both the operator and supplier under the same umbrella. The breakthrough was achieved with Government of India and the General Insurance Company (GIC) investing Rs 1,500 crore in the insurance pool. “Like GIC, the government will also be investing in the insurance pool and all premiums will be shared between the two. So there is no question of taxpayers’ money being wasted,” said a top government official.
The insurance pool method to tackle issues arising out of liability legislation has been followed in at least 26 nuclear contracts in the United States and France.
The two sides worked their way out of clause 46 after citing various Indian case laws and legislative history in order to convince the Americans. An apex court ruling was quoted saying in any law the intent of the legislators was a big factor and the word supplier was voted out by legislators in the relevant clause during the passing of Liability Act. “The legislative history showed that the legislators’ intent was not to jeopardise the supplier,” explained a nuclear negotiator. It was only after a series of presentations and case studies were shown to the US side that the Obama administration agreed to Indian law.
As far as the administrative arrangement issue was concerned, the Indian negotiators recalled the history of 123 Agreement negotiations and pointed to highest degree of safeguards in Indian nuclear installations to block any leakage or diversion of nuclear fuel. “We convinced the US negotiators that India had an effective system and capability to capture any leakage as well as a sufficiently integrated system to single out details of the entire fuel cycle, Further the civilian plants would be open to inspections by multi-lateral agencies like IAEA,” said a negotiator.
When the two leaders walked into Hyderabad House on Sunday, negotiations were complete: what was left were the finer points, which needed political decisions. And for a willing president and a pushy prime minister, those decisions were not difficult to take.