The Civil Liability for Nuclear Damage Act, 2010 has been cited as a major impediment to both domestic private investment and foreign participation in India's nuclear sector. Evaluate its implications and suggest reforms.

Q. The Civil Liability for Nuclear Damage Act, 2010 has been cited as a major impediment to both domestic private investment and foreign participation in India's nuclear sector. Evaluate its implications and suggest reforms. (15 marks, 250-350 words)

The Civil Liability for Nuclear Damage Act, 2010 (CLNDA) channelled no-fault liability to the operator, but its Section 17(b) right of recourse against suppliers for "patent or latent defects" made India an outlier among global liability regimes [1]. It was victim-protective in design yet investment-chilling in effect — a balance its 2025 replacement has now recalibrated.

Merits: a victim-centric regime - No-fault liability ensures compensation regardless of proof of negligence, with a defined operator cap and Central Government backing [1]. - Post-Bhopal, supplier recourse created a deterrent against sub-standard equipment, embedding accountability in the nuclear supply chain [1]. - The India Nuclear Insurance Pool (GIC Re-led) was created to price and absorb this recourse risk commercially [1].

Implications: why it impeded investment - Supplier exposure was open-ended and largely uninsurable, so foreign vendors sought prolonged clarifications, delaying flagship projects. - Domestic suppliers and MSMEs could not price latent-defect risk, shrinking indigenous component manufacturing. - It constrained the Nuclear Energy Mission (₹20,000 crore; five SMRs by 2033; 100 GW by 2047) by deterring the private capital such scale requires [2]. - Private players were confined to financing and project-development roles — as in the Fairwood Nuclear–SK Securities SMR/MMR pact of June 2026 — rather than ownership [4].

Reforms: enacted and pending - The SHANTI Act, 2025 repeals the Atomic Energy Act, 1962 and CLNDA, removes defective-equipment as a ground for recourse, replaces the flat cap with tiered liability (₹100–3,000 crore by capacity), licenses private companies and joint ventures, and gives AERB statutory status [3]. - Pending: companies incorporated abroad remain ineligible — ratifying the CSC framework fully would unlock FDI and technology partnerships. - Deepen insurance pool capacity, standardise supplier contracts, and staff the regulator adequately.

CLNDA thus secured victims but slowed capacity addition; the 2025 reset restores that balance. Sustained investor confidence now depends on transparent rules and regulatory independence, aligning nuclear expansion with India's Net-Zero 2070 pledge and SDG-7 on affordable clean energy.

(~330 words)

Sources: 1. FAQs on the Civil Liability for Nuclear Damage Act, 2010 — Department of Atomic Energy — no-fault liability, Section 17(b) supplier recourse, India Nuclear Insurance Pool 2. Nuclear Power in Union Budget 2025-26 — PIB, Department of Atomic Energy — ₹20,000 crore Nuclear Energy Mission, five SMRs by 2033, 100 GW by 2047 3. The Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Bill, 2025 — PRS Legislative Research — repeal of the 1962 and 2010 Acts, tiered liability, narrowed recourse, private licensing, statutory AERB 4. "Fairwood, SK Securities sign small reactor project pact" — The Hindu, 4 June 2026 (link not verifiable) — private financing tie-up for SMR/MMR development in India