Stringent liability will deter nuclear suppliers, warns CII

Last Updated: Tue, Aug 24, 2010 16:50 hrs

The Confederation of Indian Industries, a top business chamber, Tuesday lauded the civil nuclear liability bill but cautioned the government against stringent suppliers liability saying it would be a deterrent to domestic and foreign players from investing in India's nuclear sector.

In a letter to Science and Technology Minister Prithviraj Chavan, CII's director-general Chandrajeet Banerjee singled out clause 17 (b) of the nuclear bill that relates to suppliers' liability and said it was a major deterrent for suppliers.

'This clause for claim on suppliers and service providers beyond their terms of supply, for 60 years plant life plus 20 years of claim liability period, is perceived as a major deterrent by the industry,' he wrote.

The letter pointed out that 300-400 Indian suppliers and service providers are engaged for completing each nuclear power plant (both foreign as well as domestic design).

'It may not be practical for the operator to have multiple recourse against all such suppliers for civil nuclear liability,' the letter said.

'If there is multiple recourse, suppliers will be required to take insurance cover for 60 + 20 years. Globally, there is no insurance coverage available for suppliers in the nuclear business,' it added.

The letter pointed out that as insurance cover is available for operators, international liability regimes use the channeling principle to make the operator's liability absolute and exclusive, thus ensuring effective and timely settlement of nuclear damage claims.

'Given this context, Indian suppliers and sub-suppliers (including small and medium enterprises) will be precluded from conducting business in the nuclear power sector. Foreign suppliers will also not be able to participate because of lack of insurance coverage,' it warned.

'However, in the event that they do, they will pass-on the liability to Indian suppliers. This will stall the growth of the nuclear manufacturing industry in India and, will be a setback for the government's plan to indigenize maximum supplies for the foreign technology plants,' said the letter.

The industry body's warning comes amid mounting pressure on the government to toughen suppliers' liability a day before the draft bill is likely to be introduced in parliament.

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