File pic: Prime Minister Manmohan Singh and US President Barack Obama
A cabinet panel has cleared a preliminary agreement between India's nuclear power corporation and American nuclear supplier Westinghouse, just head of Prime Minister Manmohan Singh's meeting with US President Barack Obama expected on Friday.
The proposed deal will be the first since Dr Singh staked his government on a civil nuclear pact with the US five years ago and comes amid a major controversy over liability for foreign suppliers.
In case of the Westinghouse pact, the controversial question of liability will be dealt with later as the preliminary deal does not involve putting in place nuclear equipment, say Indian officials.
US, Russian and French companies have been pressuring India to grant its companies greater protection from liabilities in case of a nuclear disaster.
The US reversed a 34-year-old ban on supplying nuclear fuel and technology to India for the nuclear pact of 2008. In exchange, the US hopes to enter India's market for nuclear equipment, worth $175 billion, according to firms like General Electric and Westinghouse.
But the opposition has accused the government of bending over backwards to accommodate foreign suppliers and water down the liability clause.
In 2010, Parliament passed the Civil Liability for Nuclear Damage Act, which creates a liability cap of 1,500 crores for nuclear plant operators for economic damage in the event of an accident. If a foreign supplier's liability is limited, the Indian tax payer will have to pay in case of a nuclear accident like Fukushima in Japan, Russia's Chernobyl disaster or the Three-Mile Island accident in the US
Activists have challenged this in the Supreme Court, saying that nuclear operators and suppliers should be jointly and absolutely liable for civil damages in the event of an accident, and their financial liability must be unlimited.
The cabinet's clearance will allow India and Westinghouse to continue negotiations on the 6600 megawatt plant in Gujarat.