India to set nuclear power insurance pool

India is offering to set up an insurance pool to indemnify global nuclear suppliers against liability in the case of a nuclear accident, in a bid to unblock billions of dollars in trade held up by concerns over exposure to risk.

PM Narendra Modi’s government is hoping the plan will be enough to convince major U.S. companies such as General Electric to enter the Indian market ahead of President Barack Obama’s visit at the end of next month, according to a Reuters report.

Under a 2010 nuclear liability law, nuclear equipment suppliers are liable for damages from an accident, which companies say is a sharp deviation from international norms that put the onus on the operator to maintain safety.

India’s national law grew out of the 1984 Bhopal gas disaster, the world’s deadliest industrial accident, at a factory owned by U.S. multinational Union Carbide Corp. which Indian families are still pursuing for compensation.

The law effectively shut out Western companies from a huge market, as energy-starved India seeks to ramp up nuclear power generation by 13 times, and also strained U.S.-Indian relations since they reached a deal on nuclear cooperation in 2008.

State-run reinsurer GIC Re is preparing a proposal to build a “nuclear insurance pool” that would indemnify the third-party suppliers against liabilities they would face in the case of an accident.

Under the plan, insurance would be bought by the companies contracted to build the nuclear reactors who would then recoup the cost by charging more for their services. Alternatively, state-run operator Nuclear Power Corporation of India (NPCIL) would take out insurance on behalf of these companies.