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1 October 2014, Gateway House

Decoding the India-U.S. nuclear deal

Bringing U.S. nuclear technology to India is a goal identified in the countries’ joint vision statement. Although public discourse on the India-U.S. nuclear deal has focussed on the liability clause, the pact’s success also depends on resolving other factors such as local sourcing, technology transfer and project delays

Fellow, Energy & Environment Studies Programme

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The India-U.S. civilian nuclear deal was a top item on Prime Minister Narendra Modi’s diplomacy agenda while he was in the U.S.

The pact was originally signed in 2008, but its execution has been delayed due to disagreements over the liability clause for U.S. companies. While the public discourse has focused on the liability issue, the success of the deal actually depends on three other factors–resolving local sourcing, technology transfers, and project delays–all of which are beyond the control of either government.

India plans to build four nuclear power plants with international cooperation (see Table 1).1

Table 1: Nuclear power plants to be set up with international cooperation

Site Capacity International partner Estimated date of completion
(3& 4), Tamil Nadu
2*1,000 mw Atomstroyexport (Russia) Mar-2020, Nov-2020
Jaitapur, Maharashtra 2*1,650 mw Areva
Apr-2021, Apr-2022
Chayya Mithi Virdi, Gujarat 2*1,100 mw Westinghouse(U.S., Japan) Dec-2020, Dec-2021
Andhra Pradesh
2*1,500 mw GE-Hitachi
(U.S., Japan)
Oct-2021, Oct-2022

Source: Lok Sabha


Local sourcing

India is concerned that the majority of New Delhi’s expenditure will flow to foreign companies. This is not true. The Nuclear Power Corporation of India (NPCIL), the state-owned utility that will own and operate the nuclear plants, says that in the first phase at each site, the foreign content will be 50%, while India will build the rest. This is big business. Each megawatt costs Rs. 20 crores–and there are over 10,000 megawatts to be built. For Indian and foreign companies equally, there is a Rs. 200,000 crores opportunity.

In subsequent phases, over the next two decades, local sourcing will increase from 50% to 80%, a highly favourable outcome for India. 2

The issue of nuclear liability is a critical sticking point, especially with the U.S. government and businesses. However, India also needs a nuclear cooperation agreement with Japan before business engagements with U.S. firms can start. This is because Westinghouse is now owned by Toshiba, a Japanese firm. Another Japanese firm, Hitachi, is a partner in the Andhra project. Japanese firms will not be able to work on these projects unless an India-Japan cooperation agreement is in place, which is yet to happen.

Technology transfers

India will be able to tap the latest technology. Areva and Westinghouse will build the latest generation of their reactors, the EPWR and the AP-1000, which have a far longer design life of 60 years and more safety features than earlier versions.3  The first generation III EPWR power plant in Finland, built by Areva,4 is still under construction. Westinghouse’s AP-1000 design is also not yet operational anywhere–the construction of the first power plant based on this design, begun in Sanmen (China) in 2008,5 is also ongoing.

Using AP-1000 as a starting point, China has successfully negotiated a transfer of technology to jointly develop a new class of reactors with Westinghouse, called the CAP-1400.6 India too can do the same.

Project delays

Given that 70% of the cost of nuclear power is incurred during construction, effective project management is the key and any delays can make the project unviable. This can be a major problem.7 The capital cost of a nuclear plant is four times that of a coal-based power plant,8 and given the large size of the projects, complexity and public concerns, delays are a common problem.

Kudankulam 1 is a case in point: the project in the state of Tamil Nadu began in September 2001, with commercial operations due to begin December 2007.  But the first unit of 1,000 megawatts attained criticality only six years later, in July 2013, and attained full capacity in June 2014.9 The second phase, due for commercial launch in December 2008, is similarly delayed.

The more efficient China too is seeing delays. The Sanmen project, begun in February 2008, should have been complete in 2013; instead it will be complete only by next December.10,11 Areva’s project in Finland is doing worse: it began in 2005 and will be completed after over a decade, between 2016 and 2018.12

Anti-nuclear protests add to costs. Local protests against the Kudankulam phases 1 and 2, have delayed the project, as have demonstrations against the Jaitapur project in Maharashtra. This can sour projects financially, and must be factored in at the planning stages.

A major compromise on the liability issue alone will not be the magic wand to resolve the outstanding issues. These other dimensions must be taken into consideration before India and the U.S. can create a meaningful nuclear partnership.

Amit Bhandari is Fellow, Energy & Environment Studies, Gateway House.

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1. Lok Sabha, Status of Projects to Be Launched by NPCIL/BHAVINI/Government during XII Five Year Plan, 3 July 2014, <>

2. Nuclear Power Corporation of India, Government of India, 31 March 2011, <>

3. World Nuclear Association, Advanced Nuclear Power Reactors, 1 September 2014 <>

5., First 3rd-generation Nuclear Plant to Be Built, 28 February 2008, <>

6. State Nuclear Power Technology Corporation, CAP1400 Nuclear Power Plant, <>

7. U.S. Energy Information Administration, Levelized Cost and Levelized Avoided Cost of New Generation Resources in the Annual Energy Outlook 2014, 1 April 1 2014, <>

8. Central Electricity Regulatory Commission, Benchmark Capital Cost (Hard Cost) for Thermal Power Stations with Coal as Fuel, 4 June 2012, <>

9. Nuclear Power Corporation of India,  Kudankulam Atomic Power Project, 1 July 1 2014, <>

10. Xinhua, China Starts Building 3rd-generation Nuclear Power Reactors Using Westinghouse Technologies, 19 April 2009 , <>

11. Westinghouse, Westinghouse signs cooperation agreeements with China’s State nuclear power automation system engineering company,  14 September 2014, <>

12. Reuters, Finland’s Nuclear Plant Start Delayed Again; Areva, TVO Trade Blame, 1 September 2014, <>