SHANTI Bill sets out safety protocols for private sector in nuclear power

SHANTI nuclear law opens nuclear power to private companies through licensing and safety authorisations, while keeping strategic functions with the state and reshaping operator and supplier liability

With the new nuclear energy legislation SHANTI — short for Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India — finally coming into force, India is set to enter a new phase of global nuclear power generation and commerce.

 

The Bill is armed with provisions that seek to strike a balance between a stable and predictable investment environment for rapid capacity creation and a strong regulatory regime ensuring safety and security of critical infrastructure and its operations.

 

While the basic framework has been put in place, critical questions remain on how it will translate into actual generation, and how the government will manage critical safety protocols, especially after the relaxation of stringent liability laws.

 

What are the key changes in the new Bill?

 

Experts say enactment of the SHANTI Bill is a landmark development and will enable a single harmonised law for nuclear power in India by consolidating and repealing the Atomic Energy Act, 1962, and the Civil Liability for Nuclear Damage Act (CLNDA), 2010. This essentially means nuclear power will now be open to participants beyond the Union government and its entities through the introduction of a transparent licensing framework, supported by an appropriate and independent regulatory architecture to enable efficient governance and competitive determination of tariffs.

 

To achieve India’s target of 100 GW of nuclear power capacity by 2047, the legislation allows eligible private companies and incorporated joint ventures to apply for licences to construct, own, operate and decommission nuclear power plants and reactors. At the same time, it preserves sovereign control over strategic and safety-sensitive activities, including uranium enrichment, spent fuel management, heavy water production, radioactive substances and radiation-generating equipment.

 

“The Bill permits foreign direct investment of up to 49 per cent in specified nuclear activities under the automatic route, thereby unshackling the public sector monopoly over this domain,” said Amit Kapur, partner at law firm J Sagar Associates (JSA).

 

“Involving the private sector in nuclear power generation will be instrumental in achieving the goal of 100 GW installed nuclear capacity by 2047 as envisaged under the Nuclear Energy Mission for Viksit Bharat, while also strengthening India’s transition away from fossil fuels,” said Anujesh Dwivedi, partner at accounting and consultancy firm Deloitte.

 

“The new law will address the issue of suppliers’ exposure to civil liabilities introduced under CLNDA, 2010, and align India’s civil nuclear liability regime more closely with international standards. This move will alleviate the concerns of global technology providers and private investors, paving the way for leveraging their capabilities and intellectual property for future projects in India,” he added.

 

Renewed focus on nuclear R&D

 

The legislation also opens up research, development, design and innovation in nuclear energy for peaceful purposes, including advanced technologies such as small modular reactors (SMRs), which can be undertaken without a licence, while enabling the creation of intellectual property. “Taken together, these reforms will have an enduring impact on the country’s ability to achieve its 2070 net-zero ambition,” Dwivedi said.

 

The Bill also removes ambiguities that existed in earlier laws regarding potential multifarious jurisdiction over claims and the liability regime. It accords statutory recognition to the Atomic Energy Regulatory Board (AERB), with nuclear damage claims adjudication vested in the Claims Commissioner and the Nuclear Damage Claims Commission, whose appeals will lie before the Appellate Tribunal for Electricity. It excludes the jurisdiction of civil courts over such matters and gives overriding powers to the Act over all other laws and instruments.

 

“Interestingly, the ambit of the new legislation extends beyond power generation to include the application of nuclear technology in healthcare, food, water and agriculture, with the objective of providing a clearer and more predictable regulatory environment,” Kapur said.

 

Critical changes to safety and regulation

 

First, the law governing entry into the nuclear power sector undergoes a shift. Under existing laws, nuclear power generation was effectively restricted to the Union government and government-controlled entities. “In contrast, Clause 3 of the SHANTI Bill introduces a comprehensive licensing regime for nuclear facilities and activities,” Kapur said.

 

The legislation expressly permits a wide category of persons, including government departments and institutions, government companies, any other company, a joint venture among any of the aforesaid, and any other person specifically permitted by the Union government by notification, to apply for licences to build, own, operate or decommission nuclear power plants or reactors. It allows such parties to undertake related activities such as fabrication of nuclear fuel, transportation and storage of nuclear fuel or spent fuel, and the import and export of nuclear fuel or spent fuel, prescribed equipment, and nuclear-related technology or software. Where licensed activities involve potential radiation exposure, a separate safety authorisation is also required.

 

In this context, Kapur pointed out an important provision. “Private companies incorporated outside India are not permitted to operate under the SHANTI Bill. Clause 2(9) of the SHANTI Bill defines ‘company’ by reference to Section 2(20) of the Companies Act, 2013, and expressly excludes companies incorporated outside India. It would appear that foreign investors will have to route their investments through a company incorporated under Indian laws,” he said.

 

The legislation also ensures sovereign control over critical nuclear materials. Clause 3 draws a clear line around strategic nuclear functions, reserving certain activities exclusively for the Union government or its wholly owned entities. These include uranium enrichment or isotopic separation, spent fuel management including reprocessing and waste handling, and production and upgrading of heavy water, unless specifically notified otherwise. However, it permits licensed private entities to engage in fabrication of nuclear fuel, including conversion, refining and enrichment of uranium-235, but only up to a threshold value notified by the Union government.

 

Experts also pointed to Clause 5 of the legislation, which retains sovereign ownership and control over uranium and thorium at the upstream stage. It mandates that exploration, mining and decommissioning of mines containing uranium and thorium may be carried out only by the Union government or its controlled entities, and that all uranium and thorium mined or extracted vest in the Union government and cannot be sold, transferred or otherwise disposed of without prior approval.

 

“Read together, Clauses 3 and 5 reflect a calibrated allocation of rights and responsibilities under the SHANTI Bill, designed to facilitate participation while maintaining robust oversight and safeguards,” Kapur said.

 

What does the law change on operator and supplier liability?

 

The second essential change introduced by the legislation is on the liability of the operator and the supplier. Section 6 of the Civil Liability for Nuclear Damage Act, 2010, set out a two-tier liability framework. First, it capped the maximum liability for each nuclear incident at the rupee equivalent of 300 million special drawing rights (SDRs), with the Union government empowered to take additional measures where compensation exceeds this amount. Second, it fixed operator-specific liability limits directly in the statute, based on broad categories of installations.

 

“Even though Clause 13 of the SHANTI Bill retains the same overall incident cap of 300 million SDRs, it restructures the manner in which operator liability limits are determined. The Second Schedule of the SHANTI Bill sets out differentiated operator liability amounts linked to the thermal capacity of nuclear installations. This approach enables a closer alignment between operator liability exposure and the scale and risk profile of the installation,” Kapur said.

 

The Bill states that the operator’s liability in the case of an incident is limited to Rs 3,000 crore for reactors with thermal power above 3,600 megawatt (MW); Rs 1,500 crore for reactors with thermal power between 1,500 MW and 3,600 MW; Rs 750 crore for reactors with thermal power between 750 MW and 1,500 MW; Rs 300 crore for reactors with thermal power between 150 MW and 750 MW; and Rs 100 crore for reactors with thermal power up to 150 MW, fuel cycle facilities other than spent fuel reprocessing plants, and transportation of nuclear materials.

 

On the key issue of supplier liability, the legislation restricts the operator’s right of recourse to two circumstances: where it is expressly provided for in a written contract, or where the nuclear incident results from an individual’s intentional act to cause nuclear damage.

 

“In practical terms, this shifts supplier liability back into the contractual domain, where risk is typically managed through negotiated provisions such as liquidated damages clauses, under which liability for defects or delays is capped at a specified percentage of the contract value, as well as nuclear liability insurance. By aligning statutory recourse with contractual risk allocation, the SHANTI Bill brings greater predictability to supplier exposure and aligns India’s nuclear liability framework with international best practice,” Kapur said.

 

While the new legislation turns the page on the legal and regulatory framework for developing nuclear power capacity, its success will lie in timely commissioning of projects. Nuclear plants typically take more than 12 years to commission, compared with three to four years for coal-based projects and around two years for solar power plants.