Obama- Modi deal clears way for US nuclear plant investment in India

A breakthrough brokered during a state visit by President Barack Obama looks set to open the path for US investment in the nuclear power sector once again.

Indian Prime Minister Narendra Modi and President Obama unveiled a plan that appears to have gotten around the difficulties associated with Indian legislation that made equipment suppliers responsible for accidents.

The development will also prove a boost to Modi’s aim of reducing the country’s carbon emissions and dependency on coal power.

India's top diplomat, Foreign Secretary Sujatha Singh, said the new plan was "squarely within our law. We have reached an understanding, the deal is done," she said at a media briefing.

The new arrangement focuses on placing the financial risk to insurers in case of an accident.

After India and Washington first reached a nuclear deal in 2006, nuclear commerce worth billions of dollars was meant to be the centrepiece of a new strategic relationship, allowing New Delhi access to nuclear technology and fuel without giving up its weapons program. But the liability issue blocked progress.

India's foreign secretary said there was a bilateral understanding that India's law was compatible with the Convention on Supplementary Compensation. India has yet to ratify the convention.

It is also likely that India will need a similar deal with Japan since many of the reactor components used by the joint U.S.-Japanese companies come from there.

Under the workaround, the Indian state-run insurance company GIC Re and three others would contribute $122.09m to a pool and the balance would be contributed by the government on a tapering basis.