Bilateral/International Relations

KEY POINTS

·         The U.S.–India Civil Nuclear Agreement or Indo-US nuclear deal or the 123 Agreement was signed between US and India in 2005.

·         It's been nearly a decade since the memoranda of understanding on India-US civil nuclear deal was inked.

·         With shifts in global politics, renewable energy technology, the U.S.’s commitment to India, and the supplier’s capacity and ability, it is not apt for India to remain steadfast to a deal which is envisaged a decade ago under very different circumstances.

·         It calls for a reassessment of the deal in the context of the newly emerged global realities over the years.

Factors to be considered

·         Liability – 6 nuclear reactors were decided to be built in India by the American firm Westinghouse. Later, Westinghouse went into major cost overruns leading to a financial crisis.

·         Amidst this, the Westinghouse’s new buyers have already diluted the arrangement in India.

·         They will not construct the nuclear power project in India, and will only supply reactors and components.

·         Given this, in case of a Fukushima-type nuclear accident in India, the liability that U.S. companies would carry is highly uncertain.

·         Trump effect - Trump’s US presidency has taken a sharp turn away from renewable energy.

·         There are increased calls for mining, exporting and encouraging oil, gas, coal, and shale trade into its foreign outreach.

·         India may stand to lose Obama era support in financing renewable energy projects and facilitating India-U.S. nuclear deals.

·         India's requirements - India’s own requirements from the India-U.S. civil nuclear deal have changed considerably.

·         With existing constructions and the current capacity of 6,780 MW, India hopes to have 14,600 MW of nuclear power by 2024. 

·         Besides the nuclear power plants, the Department of Atomic Energy is advocating PHWRs in more inland sites.

·         India has also found much more comfort in its existing agreement with Russia’s Atomstroyexport.

·         It has kept a slow but steady pace in delivering reactors and operationalising power projects.

·         Cost - Another issue relates to the cost that India is prepared to pay for nuclear energy through foreign collaborations.

·         Besides - India must consider the shifts in the world nuclear industry before getting into negotiations with new companies.

·         Many nuclear companies globally are facing with major losses over their nuclear businesses.

·         As the pressure to lower nuclear power tariffs increases, nuclear safety requirements have become more stringent.

·         More countries now see nuclear power as a “base-load” option.

·         It is only preferred as a back-up option for unstable, but infinitely less costly and eco-friendly, solar and hydroelectric power options.

·         All these signal that nuclear power is losing its primacy in the energy mix, which India must be aware of.