Explained: All you need to know about the US-India nuclear deal

Prime Minister Narendra Modi, during his visit to the US, secured a commitment from President Donald Trump to build US-designed nuclear reactors in India. 

On March 26, the US Department of Energy (DoE) issued regulatory clearance to a US company, Holtec International, to transfer “unclassified small modular reactor (SMR) technology” to three firms in India. The DoE approval, though a significant stride and an outcome of Prime Minister Narendra Modi’s visit to the US in February, is going to be a small part of India’s bigger plan to achieve 100 gigawatts (GW) of nuclear power by 2047.

This is because the clauses in the regulatory clearance rule out any collaboration between Holtech and central public sector enterprises (CPSEs) such as Nuclear Power Corporation of India Ltd (NPCIL) and NTPC Ltd. The two CPSEs alone are likely to contribute at least 70 GW to the country’s target of 100 GW by 2047.

Moneycontrol on February 14 reported that Modi, during his visit, secured a deal with US President Donald Trump to build US-designed nuclear reactors in India.

Non-proliferation assurances for the CPSEs

The DoE’s authorisation permits Holtec to transfer SMR technology over a decade to its regional subsidiary Holtec Asia; Tata Consulting Engineers Ltd; and Larsen & Toubro Ltd. These will be subject to review after five years. Holtec International is promoted by Indian-American Kris P Singh, and its wholly-owned subsidiary Holtec Asia has its office in Pune and a manufacturing unit in Dahej, Gujarat.

Also read: NPCIL, sole operator of India's nuclear plants, says 'renaissance' underway in journey to 50 GW capacity.

The approval came after the Indian government on March 3 gave assurances that the three selected private entities would use the technology and information transferred from Holtec only for “peaceful nuclear activities under International Atomic Energy Agency safeguards and not for nuclear weapons or other nuclear explosive devices or for any military purpose”.

The reason why the US has allowed SMR technology transfer to the private companies and not the CPSEs is because the Indian government did not give similar non-proliferation assurances for its companies. Non-proliferation assurances are commitments or guarantees made by countries or international organisations to prevent the spread of nuclear weapons and other weapons of mass destruction.

What’s next?

The ball is now in the Indian government’s court, and it will have to expedite amendments to two laws for work to begin on the ground. India’s nuclear energy landscape is currently regulated with NPCIL, which also currently enjoys a complete monopoly over nuclear power generation.

For private companies to start participating in the nuclear energy sector, the government will have to table bills proposing amendments to the Atomic Energy Act, 1962, as well as the Civil Liability for Nuclear Damage Act, in Parliament. It is likely that the amendments will be taken up in the monsoon session.

123 Agreement to be put to use

After a wait of 17 years, the 123 Civil Nuclear Agreement between the US and India will finally come into force with the DoE’s latest decision and once India amends the necessary laws.

On his visit to the US in February, Modi and Trump announced their commitment “to fully realise” the 123 Agreement by moving forward with plans to work together to build US-designed nuclear reactors in India through large scale localisation and possible technology transfer.

The ‘123 Agreement’ gets its name from Section 123 of the US Atomic Energy Act of 1954, which outlines the requirements for agreements for peaceful nuclear cooperation between the US and other countries. Also known as the Indo-US Nuclear Deal, the agreement was signed in 2008 between the then Indian Prime Minister Manmohan Singh and US President George W Bush.

The agreement ended a regime of technology denial that was in place for over 30 years, ending India’s nuclear isolation. It also opened the doors for India to have civil nuclear cooperation as an equal partner with the US and the rest of the world. But the agreement remained mostly on paper because India slowed down on its nuclear power capacity addition plans after the Fukushima nuclear disaster that followed the 2011 earthquake and tsunami in Japan.