Prior to President Obama’s visit to New Delhi, India plans to sign a critical international agreement that defines the terms of liability and compensation in the event of an atomic accident, says the Indian Express newspaper. The CSC or Convention on the Supplementary Compensation for Nuclear Damage, has been the  subject of intense negotiations in the last few weeks between Delhi, Washington, Vienna (where the the International Atomic Energy Agency is based) .

In a September 2008 letter of intent, India told the U.S. it would sign the CSC. The Hindu reports that American nuclear suppliers had insisted on this because they said the existing Indian and international law would leave them exposed to potentially unlimited claims for damages by Indian victims in the event of a nuclear accident involving U.S.-supplied reactors.  The CSC  includes  draft national law that signatories are supposed to model their domestic legislation on. India  says its new liability law conforms to the CSC  but American officials say the Indian provisions on the nuclear operator’s right of recourse against a supplier (Section 17(b) and Section 46) in the event of an accident don’t conform to CSC recommendations.n

Last week, India’s Lok Sabha, the lower house of parliament  passed a civilian nuclear liability bill that would pave the way for foreign companies to join a nuclear-reactor building spree. This bill caps foreign suppliers’ liability in case of an accident at $320 million.

The bill now goes to the upper house, the Rajya Sabha before being signed into law. The India Expert does not expect major battles at either of these levels.

Nuclear equipment suppliers from the United States, Japan, Canada, France, Russia and India, including Westinghouse Electric and General Electric, have salivated over this nation’s $150-billion nuclear market. While the French and Russian entities have sovereign ownership, the stockholder-owned American and Japanese entities have been skittish about market entry until the liability issue is settle.

The passage of nuclear liability legislation is one more step in the global commercialization of India’s nuclear energy market.

Using uranium fuel supplied by France’s Areva and Russia’s TVEL Corporation, three of India’s oldest atomic power stations have been able to recover from low capacity factors.

The General Electric-supplied Tarapur units 1 and 2 ran at 90 and 99 percent of capacity in the period from April to June 2010; they are both rated at just 160 megawatts each  and are over 40 years old. These units are located near Mumbai. Further north in desert of Rajasthan, the RAPS 2 unit produced at 97 percent of its 200 megawatt capacity in the same time frame.

All three reactors are under the IAEA safeguards regime which allows India to use imported uranium at plants where there is no potential of military application. Currently six Indian reactors  totalling to 1060 megawatts are under international safeguards and qualify for the use of imported uranium.

Areva is contracted to supply 300 ton for India’s existing Pressurised Heavy Water Reactors based on the “Candu” technology. TVEL Corporation is commited to 2,000 tons of uranium pellets in low-enriched form for use in Tarapur and in the new plants at Kudankulam, which use Russian VVER technology but are not operational yet.

The benefits to Russian and French companies are flowing from the American led movement to open up nuclear commerce with India, after sanctions were first imposed in 1974. Ironically American companies have yet to gain export permissions to sell anything to India.

I write for Business Week from time to time and this week, Dr. Atul Goel and I wrote a piece entitled: Innovation from India, the next Big Wave.  It took them some time to publish the piece, but in many ways it is even more relevant now than when we first wrote it, given the state of the global economy.

Click here to read about how Innovative companies the world over are discovering the research and development advantages to be found in India.