India parliament lower house passes nuclear bill

NEW DELHI (Reuters) - India's lower house of parliament on Wednesday approved of a landmark bill to open up the country's $150 billion nuclear power market, after the government agreed to tougher provisions that an industry group said would hamper the sector's growth.

The bill is needed for the entry of firms such as U.S.-based General Electric and Westinghouse Electric, a subsidiary of Japan's Toshiba Corp, who are reluctant to step in without clarity on accident compensation.

The bill was initially opposed by the opposition Bharatiya Janata Party as inadequate in terms of accident compensation and too soft on private firms. But the party came around after the Congress party-led coalition agreed to several amendments.

The BJP's support was key in enacting the legislation as the ruling coalition has only a narrow majority in the lower house and does not control the upper house.

The see-saw negotiations are emblematic of India's fractured polity, and highlight the challenges ahead for the government, which is involved in tortuous negotiations on other key financial reform proposals with opposition and allies.

The passage of the bill is a personal victory for Prime Minister Manmohan Singh, whose 2008 deal with the United States ended India's long isolation in the global nuclear market, and will bind the two nations in closer economic and strategic ties.

The opening up of the sector will facilitate also the building of nuclear plants and boost generating capacity in a country where power deficits have dragged on economic activity.

Singh, who as finance minister in 1991 opened up the closed economy and is credited for the current levels of rapid economic growth, said his latest initiative would be judged in a similar light by history.

"It is with this very motivation that our government has tried to complete toward the ending of the regime of nuclear apartheid," a confident Singh told parliament during the debate as he rejected claims the bill suited U.S. interests.

"To say that we have in anyway compromised with India's national interest would be a travesty of facts."

INDUSTRY CONCERNS

The bill will now be sent to the upper house, and following ratification there, to the president to be signed into law.

Since it was first introduced in parliament in April, government has given in several times to opposition demands on the provisions, trebling the compensation cap in case of an accident and extending liability to suppliers.

The five-hour debate over the bill saw the house rejecting by 252 to 25 an amendment sponsored by the left parties, which would have set no limit on the compensation that could be claimed in the case of an accident.

The amended bill will make it easier to extend liability claims to suppliers in case of a nuclear accident, removing a clause that would have permitted such claims only if there was proof of willful intent to cause damage.

The Confederation of Indian Industry, a business lobby, said the bill would keep away domestic and foreign suppliers.

"Globally, there is no insurance coverage available for suppliers in the nuclear business," CII wrote in a letter to the government, which was released to the press on Wednesday.

"This will stall the growth of the nuclear manufacturing industry in India and be a setback for the government's plan to indigenize maximum supplies for the foreign technology plants."

(Editing by Krittivas Mukherjee and Alex Richardson)