The United States bent on how it monitors fissile material exports to pave the way for the administrative agreement signed during Barack Obama’s state visit. India, in turn, came up with a legal environment that opened the door for US nuclear firms to sell reactors – but within the ambit of India’s liability law.
By US law and custom, say high-level sources, US inspectors have to track the fissile material and nuclear components sold to foreign countries. The US Nuclear Regulatory Commission (NRC) then certifies to the US Congress this material has not gone astray.
India resisted US monitoring of its reactors, arguing it already allowed the International Atomic Energy Agency to inspect its civilian reactors.
During three meetings of the Indo-US nuclear contact group established after Prime Minister Narendra Modi’s US visit in September last year, a compromise was hammered out.
India and the US would hold an annual consultation during which the former would share its data on it use of the imported fissile material. This data would then be the basis of the NRC’s annual certification. But the overall monitoring would be left to Indian officials. However, the IAEA’s inspection teams would have two American staffers.
The annual consultative process with the US will be unique to India. Because it is so new it may require a “mid-term correction” as it is put into practice. Which is one reason the nuclear contact group would continue to meet. In fact, the annual consultations would probably revolve around the same team.
The liability issue was a case of India putting forward a plausible legal argument to the US side that their companies could do business without the law being changed.
New Delhi put forward that the combination of the rules and regulations notified after the passage of the liability law, the reading of section 35 of the law, broader case law and an Indian promise to ratify the international Convention on Supplementary Compensation (CSC) meant that the channeling of liability to a nuclear supplier was not mandatory.
Section 35, New Delhi argued, effectively funneled all claims by nuclear victims to a claims commissioner and ruled out further recourse to the law of tort.
The Indian side said that while a nuclear operator was clearly liable, whether a supplier was automatically liable – violating international norms, would depend on the contract signed between operator and supplier. US officials were thus persuaded that India’s liability law was not incompatible with the CSC.
Part of the problem, it was realized, was that India and the US had never had a top-level thrashing out of the entire liability issue with all its legal nuances. It was now up to individual companies to decide if this was enough for them given that no further legislation was being contemplated by India for now.
The combination of this and pressure from Modi and Obama to find a solution opened the door to both nuclear agreements. But negotiations went down to the wire with both sides working on deliverables even as Air Force One was landing in Delhi.
Other high-level decisions in renewable energy and defence cooperation made it easier to come to agreements in these areas.
Obama understood that climate change was “an article of faith” for Modi. But the issue of India making commitments on carbon emissions was left to a continuing negotiating track leading to the Paris climate conference later this year. The focus was on how the US could help India achieve its ambitious clean energy targets, especially in finance and technology.
In defence, the two sides renewed the 10-year defence framework. The formal signing has been on hold, pending the Senate approving the new Pentagon chief, Ashton Carter. However, both governments may decide next week to go ahead and sign rather than wait.
The agreement to co-produce and co-develop four weapon systems was also something worked out just days before the summit began. The initial push will be to work through the thicket of US export controls and regulatory issues. There is an expectation of “bureaucratic resistance”, said a source, but a political commitment had been made. By going initially for simpler systems the idea was to avoid having a project stuck in the export control process for a couple of years.