US President Barack Obama (R) walks past an honour guard during the official welcome ceremony for his arrival at the Presidential Palace in the Indian capital New Delhi on Sunday. US President Barack Obama held talks January 25 with Prime Minister Narendra Modi at the start of a three-day India visit aimed at consolidating increasingly close ties between the world's two largest democracies. Image Credit: AFP

New Delhi: India and the United States Sunday reached “a breakthrough” on issues holding up their civil nuclear cooperation and agreed to move towards commercial cooperation of their landmark civil nuclear deal that was initialled by the then leaders of the two countries on July 18, 2005.

US President Barack Obama said at his joint media interaction with Prime Minister Narendra Modi after their summit-level talks here that the two countries had reached breakthrough on two pending issues on the nuclear deal. Modi said that, six years after the deal was formally signed, the two countries have were “moving towards commercial cooperation..”

Indian Foreign Secretary Sujatha Singh later confirmed that agreement has been reached. “The deal is done. We have broken the logjam of the past few years,” she said.

There has been an impasse on operationalising the Indo-US nuclear deal with US companies having misgivings over India’s stringent civil nuclear liability law that puts the onus for any accident on suppliers. India had objection to the US insistence on control in perpetuity over the nuclear fuel and equipment.

In his remarks at the media interaction, Modi said the civil nuclear agreement had been the centrepiece of transformed relationship between the two countries and demonstrated new trust.

“It also created new economic opportunities and expanded our option for clean energy. I am pleased that six years after we signed our bilateral agreement, we are moving towards commercial cooperation, consistent with our law, our international legal obligations, and technical and commercial viability.”

Obama said the two leaders agreed to “advance our civil nuclear cooperation and we are committed to moving toward full implementation”.

“It is an important step and shows us how we can work together to elevate our relationship,” he added.

According to the World Nuclear Association, India has a flourishing and largely indigenous nuclear power programme and expects to have 14,600 MWe nuclear capacity on line by 2020. It aims to supply 25 per cent of electricity from nuclear power by 2050.

Because India is outside the Nuclear Non-Proliferation Treaty due to its weapons programme, it was for over three decades largely excluded from trade in nuclear plant or materials, which has hampered its development of civil nuclear energy.

The nuclear deal was seen as a key deliverable during Obama’s visit. There has been concern in the US over the nuclear deal as firms from other countries had taken a lead in tapping India’s nuclear reactor market estimated at $150 billion (Dh551 billion). The Indo-US Civil Nuclear Agreement was initialled between then Indian Prime Minister Manmohan Singh and then US President George W. Bush in 2005.

It culminated in the formal 123-agreement bill, which was approved by the US Congress and signed into law in 2008. The deal has been stalled since 2008.

A contact group comprising officials from both sides associated with nuclear affairs, was set up during Prime Minister Modi’s US visit in September, last year. It was charged with advancing the implementation of the stalled nuclear deal.

The group had met twice already in India and the US respectively and met in London for the third time before Obama’s meeting with Modi Sunday.

One of the biggest sticking points in the implementation of the civil nuclear deal has been India’s tough nuclear liability regime. The Civil Liability for Nuclear Damage (CLND) Act, 2010 places the onus on equipment suppliers in the case of an accident at a nuclear plant.

Two provisions of the liability law are seen as areas of concern by the US, especially section 17(b) relating to channelling of the operator’s right of recourse on the suppliers and section 46, which is seen as exposing suppliers to unlimited liability.

The stringent liability law has kept global firms like GE-Hitachi, Toshiba’s Westinghouse Electric Company and France’s Areva from venturing into India’s nuclear sector for constructing reactors.

The US and India were reported to be working towards a proposal to set up a $250 million insurance pool with money from all stakeholders to pay off liabilities. The insurance pool is aimed at indemnifying companies building nuclear reactors in the country, against liability in case of an accident.

As part of the plan prepared by the state-run insurer GIC Re, the companies building rectors in India will have to buy insurance, but can recoup the cost by charging more for their services.

Alternatively, the Nuclear Power Corporation of India (NPCIL) can take out insurance on the companies’ behalf.

The liability law in India was drafted keeping the Bhopal gas tragedy in mind and is a deviation from the global norm in which the operators of nuclear reactors, and not the equipment suppliers, bear responsibility in case of an accident.

The contact group also comprised representatives of the Nuclear Power Corporation of India (NPCIL) from the Indian side and Westinghouse and GE-Hitachi from the US side.

Among the issues also discussed were “administrative arrangements” of how both sides would work towards implementation of the deal.

Modi and Obama met at Hyderabad House here in summit-level talks, the second in the last four months since the two countries held similar-level talks during the prime minsiter’s maiden visit to the US in September 2014.

Obama, accompanied by his wife Michelle, is here to attend the 66th Republic Day parade as chief guest.