The government of India ratified the Convention on Supplementary Compensation (CSC) for Nuclear Damage on February 4, 2016, making India a part of the global agreement establishing standards for compensation of victims of nuclear accidents. Prior to the ratification of the CSC, nuclear power equipment manufacturers would be held liable for nuclear accidents, not the plant operators. Consequently, U.S. nuclear power equipment manufacturers expressed significant reluctance to participate in the construction of any nuclear power plants in India, despite the massive market potential—nearly US$150 billion, by some estimates.

Ratification of the CSC allows U.S. nuclear power equipment manufacturers, particularly General Electric and Westinghouse, to begin playing catchup in the Indian nuclear power plant market with incumbent nuclear power equipment manufacturers from Russia and France already in the market.

Government officials from the U.S. and India both hailed the ratification as an important step to growing the Indian nuclear power industry as well as to strengthening international cooperation. John Kirby, a U.S. State Department spokesman, said that the ratification would “facilitate participation by companies from the United States in the construction of nuclear reactors in India, which will mean more reliable electricity for Indians, will reduce its reliance – India’s reliance on carbon-intensive sources, that will benefit the environment, and will offer India greater energy security for its large and growing economy.”

The permanent representative of India to the International Atomic Energy Agency (IAEA), Ambassador Rajiva Misra, added, “We were eager to complete the process at the earliest, and today, with India joining the CSC, we are contributing to strengthening an international convention and global nuclear liability regime.”

Reports indicate that a number of U.S. nuclear power equipment manufacturers are in talks to participate in nuclear power plant construction in India, with some reports citing figures of at least six contemplated power plants using U.S.-manufactured equipment. However, some commenters believe that without a definitive court ruling in India establishing the authority, scope and function of India’s ratification of the CSC, it will still take a particularly lucrative package to entice the U.S. nuclear power equipment manufacturers to fully commit to the Indian power plant market.

© 2016 Perkins Coie LLP