The budget's focus on developing 100 GW of nuclear energy by 2047, alongside amendments to the Atomic Energy Act and Civil Liability for Nuclear Damage Act, can revitalize the dormant India-U.S. Civil Nuclear Agreement.

About India-U.S. Civil Nuclear Agreement or 123 Agreement

Background
- 1978: U.S. imposed sanctions on India after India's 1974 nuclear test.
- 2005: U.S. and India agreed on civilian nuclear cooperation.
- 2008: U.S.-India Civil Nuclear Agreement, or "123 Agreement" (under Section 123 of the U.S. Atomic Energy Act), was finalized
Overview of India-U.S. Nuclear Agreement
- International Atomic Energy Agency (IAEA) Safeguards: India permanently placed its civilian nuclear reactors under IAEA safeguards.
  - Further, India signed an Additional Protocol, enabling more intrusive IAEA inspections of civilian nuclear facilities.
- Nuclear Testing & Security: India put a voluntary moratorium on nuclear weapons testing and strengthened the security of its nuclear arsenals.
- U.S. Collaboration: U.S. companies were allowed to build nuclear reactors in India and supply nuclear fuel for its civilian energy program.
- Nuclear Suppliers Group (NSG) Waiver: Despite being a non-signatory to the Non-Proliferation Treaty (NPT), the NSG lifted its ban, enabling other countries to sell nuclear fuel and technology to India.
  - NSG: Formed in 1974 post-India's Pokhran-I test; regulates nuclear trade.
  - NPT: Effective in 1970 under the UN, aims to prevent proliferation, promote disarmament, and enable peaceful nuclear use.

Infographic explaining India's unique position in with respect to civil nuclear agreement with the US

Significance of India-U.S. Civil Nuclear Agreement

Ended India's Nuclear Isolation: The Agreement marked a historic shift by lifting a three-decade U.S. ban on nuclear trade with India.
Legitimized India's Nuclear Status: It granted India de facto recognition as a nuclear weapons state (despite its refusal to sign the NPT), allowing access to international nuclear technology and fuel at the same time permitting it to maintain its nuclear weapons program.
- E.g., Cooperation agreements with France, Russia, UK, Japan, and Canada enabled peaceful nuclear projects like Jaitapur and Kudankulam plants.
Strengthened India-US Strategic Partnership: The agreement laid the foundation for deeper U.S.-India ties, transforming a once-strained relationship into a comprehensive global strategic partnership.
Enhanced Domestic Energy Security: Nuclear fuel access improved reactor efficiency from 50-55% (2006-2007) to 80%, supported by long-term uranium import agreements with France, Kazakhstan, Australia, Canada, and Russia.
Enabled participation in other regimes: Post 2008, India joined 3 major export control regimes- Missile Technology Control Regime (MTCR) (Joined in 2016); Wassenaar Arrangement (2017); Australia Group (2018).

Challenges in India-U.S. Civil Nuclear Agreement

Civil Liability Law Conflicts: India's Civil Liability for Nuclear Damage Act (CLND) 2010 created tension with international norms.
- Section 17B of CLND Act: It allowed operators (Nuclear Power Corporation of India Limited (NPCIL), which operates India's nuclear power plants) to seek compensation from suppliers (e.g., US companies) in case of accidents.
Supreme Court Judgement: In 2010 SC, influenced by Bhopal Gas Tragedy lessons, upheld supplier liability under India's nuclear law, deterring private investments.
Commercial Viability Challenges: Westinghouse, a major nuclear power plant manufacturer, filed for bankruptcy in 2017 jeopardized the implementation of India-U.S. nuclear deal.
- It affected plans to set up six AP1000 nuclear reactors in Kovvada, Andhra Pradesh.
High Capital Costs of Nuclear Energy: India had gradually shifted its focus toward solar and wind energy, which are more cost-effective than nuclear power.

Key Features of India's Civil Liability for Nuclear Damage (CLND) Act, 2010

Operator Liability: The CLND Act channels strict liability exclusively to the nuclear plant operator.
Supplier's Right of Recourse: Section 17 allows operators to seek recourse from suppliers for defects/intentional damage (via contracts).
Compatibility with Convention on Supplementary Compensation for Nuclear Damage (CSC): India's CLND Act complies with CSC requirements, enabling India to join the CSC.
Insurance Pool Mechanism: The India Nuclear Insurance Pool (₹1,500 crore) covers operator/supplier liabilities, reducing litigation risks and enabling market-based risk-sharing.
No Retrospective Application: Future amendments to liability limits cannot retroactively alter existing contracts, protecting suppliers under the law at the time of agreement.

Way forward to operationalize India-U.S. Civil Nuclear Agreement

Amend India's Civil Liability for Nuclear Damage (CLND) Act: Align the CLND Act with the international Convention on Supplementary Compensation (CSC) by channelling all liability solely to the operator of a nuclear plant.
Establish an Intergovernmental Understanding on Liability: Formalize an agreement between the U.S. and Indian governments to confirm the limited liability of foreign private companies involved in nuclear trade.
Expedite the Implementation of the Insurance Pool: Fully fund and operationalize the insurance pool created under the CLNDA to provide financial safety for operators and suppliers.

Conclusion

The India-US Civil Nuclear Agreement holds transformative potential for energy collaboration, but resolving liability challenges is essential to unlock technological partnerships and attract critical foreign investments.