Can the Shanti Act kickstart India's nuclear renaissance?

  Interestingly, after the NSG waiver, a handful of supplier nations, including France, Russia, and Kazakhstan, signed nuclear cooperation agreements with India even before the US did, exemplifying the enthusiasm to exploit a burgeoning nuclear energy market which could cater to then what was the world’s second largest population, and soon to be the largest, along with one of the fastest growing economies. Over the years, even “nay-sayers” and “fence sitters” who opposed the India-specific waiver at the NSG also ended up signing nuclear cooperation agreements with India. The highlight of such agreements was the access to the largest uranium depositories in Australia, Canada, and Kazakhstan, among others, and the flurry of deals that India concluded with African countries rich in yellow cake deposits. 

But the real promise of the nuclear deal, besides its strategic spinoffs, was of initiating a sweeping expansion of the nuclear energy sector. This entailed building new nuclear power plants with foreign support and enabled a rapid progress towards the declared target of 10,000 megawatt (MW) power production capacity, and beyond.

  Even as the Indian atomic energy establishment continued to vouch for its indigenous pressurised heavy water reactor (PHWR) base and the fast breeder reactor (FBR)-based second stage, the highlight of the nuclear agreements with major supplier states was the promise of new nuclear plants to be set up across India. At least six such projects were announced in the agreements that came in the first wave after the NSG waiver.

  While the French company Areva intended to construct the world's largest nuclear power plant in Jaitapur (Maharashtra) with six 1,730 MW-reactors producing a capacity of more than 9,000 MW, the other projects have targets of 2,300-6,000 MW capacities. Even the addition of single reactors in the 500-1,700 MW range in some of these plants in a period of 10-15 years was expected to considerably enhance India’s nuclear power output, especially when accounted with the four units set up by Russia in Kudankulam, Tamil Nadu. But protests soon started against some of the projects on issues of land acquisition and displacement of population. As of late 2025, only the project in Haryana’s Gorakhpur is progressing, whereas both the Indian and French governments have asserted that the Jaitapur project is well on track. According to a statement given in Parliament, the Jaitapur project is slated to set up a capacity totalling 10,380 MW, “accounting for 10 per cent of India’s 100 GW nuclear energy target by 2047”. 

Achieving the 100 gigawatt (GW) target has been the guiding mantra for India’s nuclear energy programme since the culmination of the nuclear deal. Yet, fulfilling the existing target of 10,000 MW, revised from the 20,000 MW originally conceived during the Homi Bhabha years, was one of the key stimulants behind the Manmohan Singh government’s decision to harness the scope for new nuclear power plants with participation of foreign suppliers. An important factor that weighed in this planning was the reality of the second stage not attaining fruition as expected, nor the thorium cycle showing visible signs of technological feasibility in the near future.

  The mission to transition to the second stage of India’s three-stage programme has been lingering with unfulfilled and shifting timelines. The target of 100 GW 20 years from now seems a long shot even with a major policy stimulus, unless the Indian nuclear energy sector witnesses a dramatic technological leap: namely, the swift progress towards the third stage of the three-stage indigenous nuclear energy development programme and expansive modular reactor imprint across the country, as also the rapid deployment of the foreign-supplied nuclear reactors. However, the progress towards these goalposts would need an enabling environment, which is what the Narendra Modi-led government seemingly intends to achieve with the Shanti (Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India) Act, 2025.

  Whether its objectives could be achieved would not only depend on the fine print but also whether the envisaged route map — including the opening up of the sector to private players, and dilution of liability provisions to allure the suppliers, both domestic and foreign — will realistically complement and buttress the technological trajectory, which includes the envisaged vision of the “three-stage” programme.

  The contours of the Act

  The Shanti Act is presented as an umbrella legislation that subsumes the Atomic Energy Act of 1962 and its 1987 amendment, the Civil Liability for Nuclear Damage Act (CLNDA) of 2010, and also the Civil Liability for Nuclear Damage Rules, 2011. The preamble of the Shanti Act states its purpose as: to provide for the promotion and development of nuclear energy and ionising radiation for nuclear power generation, application in healthcare, food, water, agriculture, industry, research, environment, innovation in nuclear science and technology, for the welfare of the people of India, and for robust regulatory framework for its safe and secure utilisation and for matters connected therewith or incidental thereto.

  Referring to the “closed fuel cycle” and the three-stage programme, the Act talks about “full exploitation of India’s abundant thorium reserves” and “speedy development for large scale thorium utilisation” as requiring “strong institutional foundations for research, development and usage of next generation technologies”. Having incorporated all the existing legislations and rules into a single framework, the Act also discards a long-held terminology in international nuclear communication — of “peaceful uses” of nuclear energy. Instead, it talks about India being “committed to expand the application and deployment of nuclear science and technology to enhance nuclear energy share of the total energy mix… in a responsible way”.

  Also, a revised set of definitions reflects the incorporation of existing legislation and fills the gaps in the previous legislation. Although it retains almost all provisions from the CLNDA on the definition of “nuclear damage”, the Shanti Act directly defines it as “any injury, loss or damage caused by a nuclear incident”, before going on to explain the nature of damages and the causal factors that could lead to nuclear damage(s). The definition of “nuclear incident” in the Shanti Act remains unchanged, other than an addition of “despite all reasonable measures taken to prevent or mitigate the damage” — as opposed to “with respect to preventive measures” — in the CLNDA. 

  The notable change in the Shanti Act is the definition of “operator” — to reflect the opening up of the sector, as well as additions like “safeguards”, “safety”, and “spent fuel”, which were not defined in the Atomic Energy Act or the CLNDA. While the CLNDA defined “operator” as “the Central Government or any authority or corporation established by it or a Government company who has been granted a licence pursuant to the Atomic Energy Act, 1962 (33 of 1962) for the operation of that installation,” the Shanti Act defined “operator” as “the person who has been granted a licence under this Act for the purpose of operating the nuclear installation”.

  While defining “safeguards” as a “set of measures necessary to ensure that source material and fissile material are controlled and accounted for”, the Shanti Act not only omits any reference to the IAEA Safeguards agreements, but also instructs that the source material and fissile material in any form, produced within India or imported, shall “remain under the surveillance and control of the Central Government” for the purposes of accounting, and “shall be subject to such safeguards as may be specified by the Central Government”. 

Having subscribed to an improvised version of Information Circular-66 type safeguards through the 2007 agreement with the IAEA, the Indian government has, through the Shanti Act, reserved the right to determine the safeguards that could possibly be applied in the new projects. While adopting Comprehensive (or Full-Scope) Safeguards, as applicable for non-nuclear-weapon states, might not be on the cards, the government might have left the space open on the scope of determining the safeguards framework when it comes to reactors operated by private entities, including in cases where reactors and materials could involve foreign suppliers. The same applies to “safety”, wherein the Shanti Act incorporates “safety authorisation” from the Atomic Energy Regulatory Board as integral to the licence requirements. 

Beyond the across-the-board integration of operational, liability, compensation, and safety frameworks, the Shanti Act opens up the sector to private participation, and dilutes the liability framework for suppliers. Both have significant implications for the future of India’s nuclear energy development, as rapid expansion of the sector in order to meet the ambitious goal of 100 GW comes with both opportunities and risks that need to be cushioned with robust legal and policy mechanisms to ensure both productivity and accountability. What are the implications of these two policy shifts?

  Liberalisation of the industry

  From the setting up of the DAE and the reorganisation of the Atomic Energy Commission in the 1950s to the promulgation of the Atomic Energy Act in 1962, nuclear energy development was deemed a strategic national mission that was monopolised and under the full control of the Indian government ever since. 

According to the 1962 Act, which repealed the 1948 Act, the central government has the power “to produce, develop, use and dispose of atomic energy either by itself or through any authority or Corporation established by it or a Government company and carry out research into any matters connected therewith”. The 1987 amendment also added the provision “to manufacture or otherwise produce any prescribed or radioactive substance and any articles which in its opinion are, or are likely to be, required for, or in connection with, the production, development or use of atomic energy or such research as aforesaid and to dispose of such described or radioactive substance or any articles manufactured or otherwise produced”. The 1962 Act also vested in the central government the solitary powers to deal with and complete control over all “radioactive” materials, restrict information pertaining to the nuclear programme, declare “prohibited areas”, and a whole set of powers pertaining to nuclear minerals, rare earths, production and use of nuclear energy, and so on.  

  The 1987 amendment was a landmark step that was meant to facilitate the establishment of the Nuclear Power Corporation of India Limited (NPCIL) as the monopoly, government-owned operator of all civilian nuclear reactors in the country (of which DAE supervised the strategic ones).  The amendment changed Section 2 of the 1962 Act by inserting clause “bb”, which defined “Government company” as meaning “a company in which not less than fifty-one per cent of the paid up share capital is held by the Central Government”. 

A handful of other amendments and insertions were made to provide the legal framework of a government company taking over the function of “operator” of nuclear reactors. These include insertion of the provision “either by itself, or through any authority or corporation established by it or a Government company” in Section 3 of the 1962 Act. The other additions included rights to “manufacture or produce any prescribed or radioactive substance and any articles…in connection with, the production, development or use of atomic energy...buy, acquire, store and transport radioactive substances” and so on, all of which, as per the Act, were powers solely vested in the central government, but then on to be exercised by the government itself or “through any authority or corporation established by it, or a Government company”.

  These provisions, which were identified with state monopoly over the nuclear energy sector, have been discarded by the Shanti Act to open up the sector. A key feature introduced is a licensing system to set up any of the facilities or undertakings that are described in Section 3(2) of the Act.

  So, the extent of nuclear “activities” extends to all elements of the nuclear fuel cycle with broader participation sought from a cross-section of entities, and not necessarily restricted to the construction and operation of a nuclear power plant or reactor, or supply of materials. But the Shanti Act’s radical aspect is opening up the sector to a wide range of entities — both government and private — to participate in India’s nuclear renaissance. 

  “Company” under the Shanti Act means the same as in clause 20 of Section 2 of the Companies Act, 2013, but does not include one incorporated outside India. In other words, a foreign company will not be provided a licence under this Act, with even joint ventures restricted to companies and entities that are incorporated in India: private, public, or government-owned. Interestingly, the Act does not make any specific mention of “foreign suppliers”, notwithstanding that the global nuclear companies had objected to the CLNDA’s “Right of Recourse” (RoR) clause. The only places where the “foreign” element is recognised by the Act are in the context of liabilities and territorial jurisdiction for nuclear damage claims. For instance, the operator in India is liable for “such nuclear material (that) has been unloaded from the means of transport by which it was sent to a person within the territory of a foreign State”.

  Leave alone “foreign” entities, even the entity or concept of “supplier” is neither defined nor finds mention in the Shanti Act. This is despite the fact that the Civil Liability for Nuclear Damages Rules, 2011, had defined “supplier”.

  While this omission in the Shanti Act seems to be a conscious one, it raises questions on how the Indian government seeks to bring foreign entities, including suppliers, into the ambit of the Act or Indian law when engaging in nuclear cooperation with Indian operators. This may seem a major lacuna if the government had consciously sought to keep foreign entities beyond the scope of accountability, including through the dilution in the RoR, as also refusing to account for the role and liabilities of foreign entities in the Indian nuclear energy ecosystem.

  Diluting liability benchmarks

  The Shanti Act adopts the principles and features of the CLNDA almost entirely but chooses to make some significant omissions, alterations, and additions to address some long-running irritants or obstacles to the pursuit of nuclear cooperation with foreign partners. To understand the changes in the liability benchmarks, we need to revert to the context of the CLNDA and its intricacies. The CLNDA was framed not just to address the need for an appropriate legal framework to establish liability and ensure swift compensation in the event of a nuclear incident, but also to adhere to the Convention on Supplementary  Compensation for Nuclear Damage (CSC), which required signatory states to legislate a compliant domestic liability law.

  While many hailed the CLNDA as a progressive piece of legislation with inbuilt best practices, the international supplier community saw it as deviant from the CSC, and the Vienna and Paris conventions. But the government had pointed out that it is not party to the latter two conventions even as it signed the CSC on the basis of the CLNDA.  

  At the root of the discontent was Section 17(b) of the CLNDA, which stipulates one of the conditions of the operator to exercise its RoR against the supplier is “if the nuclear incident has resulted as a consequence of an act of supplier or his employee, which includes supply of equipment or material with patent or latent defects or sub-standard services”. Also, 17(c) mentions the RoR as applicable if “the nuclear incident has resulted from the act of commission or omission of an individual done with the intent to cause nuclear damage”. Furthermore, Section 46 stated that this Act is in addition to other domestic laws in force, thereby allowing criminal liability and other tort claims. Unlike the CSC, which allows for a RoR only if it is “written in the contract”, and if the nuclear incident is a result of “an act with intent to cause damage”, the CLNDA expanded this interpretation to include “patent or latent defects in materials or equipment or sub-standard services”.

  Not only did the major global suppliers reject the claims of any apparent safety benefits that might accrue by holding them liable, but they also expressed their inability to participate in India’s planned nuclear energy expansion under this liability framework. In response, the Indian government limited suppliers’ liability (to the value of the contract or operator’s liability) and the time frame (initial license period or product liability period) for exercising the RoR through the Civil Liability for Nuclear Damages Rules, 2011. But some prominent legal experts had then opined that 24(2) of the 2011 Rules is ultra vires for scaling down the liability limits and timeline and could be inconsistent with Section 6 of the CLNDA.

  In a December 2014 policy brief for the Manohar Parrikar Institute for Defence Studies and Analyses, I had contended that Section 6 specifically provides for “only increasing the maximum liability amount” for compensation or even the operator liability, and so, does not include any provision that could preclude the scope for scaling down the liability amount or timeline for exercising RoR. Accordingly, Section 6 allows the government to review the operator’s liability from time to time and specify a higher amount, besides taking additional measures to enhance the maximum amount of liability. It was then pointed out that the mandatory clause of “writing in contract” gives operators the flexibility to frame supplier-friendly contracts, with built-in safeguards to ensure quality control, risk-sharing, or a guarantee time frame from the latter. Similarly, the RoR had limited teeth since the operator must prove the intent to cause damage against a supplier, which should also stand legal scrutiny. 

The other major balancing factor was the potential for indemnification and insurance. Section 8(1) of the CLNDA mandated operators to take an insurance policy or such other “financial security” (indemnity or guarantees) to cover their liability. This normally implies that the operator could insure for all aspects of the nuclear project to which it is liable or take suitable financial measures to cushion itself from bankruptcy. Similarly, Article 2(2) of the CSC also required the national law to indemnify “any person other than the operator liable… to the extent that person is legally liable to provide compensation”. While this  encourages the contracting party (installation state) to provide for an insurance or a funds pool (Nuclear Liability Fund as suggested in Section 7(2) of the CLNDA), many wanted the “indemnification” to extend to the suppliers, which had the inherent risk of diminishing accountability and encouraging complacency. 

Eventually, the Indian and US governments reached an understanding mostly on these lines during the visit of US President Barack Obama to India in January 2015. The Ministry of External Affairs subsequently released a FAQ dossier which clarified that while the RoR is a substantive right to the operator, it was only an enabling provision that “permits but does not require” an operator to include in the contract or exercise a RoR as a mandatory legal requirement. This flexibility, the FAQ elaborated, is inherent in the contract as the “situations identified in Section 17(b) relate to actions and matters such as product liability stipulations/conditions or service contracts…(which) are ordinarily part of a contract between the operator and the supplier”. It is for the operator and the supplier “to agree on the terms of their contract… elaborate and specify the extent of their obligations pursuant to warranty and indemnity clauses that are part of such contracts”. 

The dossier stated that the CLNDA ensures the operator’s liability shall be strict and channelled to them via the regime of “no-fault” liability. Also mentioned is Section 8(1), which provides that “the Operator shall before he begins operation of his nuclear installation, take out insurance policy or such further financial security covering his liability”. It also claimed that the CLNDA is “broadly in conformity with the CSC and its Annex in terms of channeling the strict/absolute legal liability to the operator, the limitations of the liability in amount and time, liability cover by insurance or financial security, definitions of nuclear installation, damage, etc.” 

Accordingly, the FAQ announced the decision to float the India Nuclear Insurance Pool as a risk transfer mechanism, formed by the general insurer GIC Re and four other public sector units (PSUs), with a corpus of ₹750 crore out of a total of ₹1,500 crore. The government was to contribute the balance capacity on a tapering basis. The Pool, the dossier said, will ensure that operators and suppliers will see each other as partners managing a risk together, instead of potential litigating adversaries.

  Abandoning CLNDA principles 

While retaining some of these arrangements, the Shanti Act has largely abandoned the broad principles that guided the CLNDA and this understanding of January 2015. The Act completely jettisons Section 17(b) of the CLNDA. Instead, in Section 16, the Shanti Act carries the other two provisions, which completely reflects the CSC’s RoR clause. This action comes as a surprise, as it was the Modi government that stood by the CLNDA while reaching a broad understanding with the US government in January 2015. That the Modi government has discarded — without seeking public opinion or a national debate — a key provision that was seen as an industry best practice following the 2011 Fukushima disaster, is equally surprising.

  The Shanti Act seems to have abandoned the India Nuclear Insurance Pool altogether without any indication of the corpus announced in the FAQ or the resources spent by the insurance PSUs. Instead, Section 15 instructs the operator to, before operation of nuclear installation, “obtain an insurance policy or such other financial security or combination of both, covering the liability”, and renew the policy or “financial security” from time to time. This clause will not apply to a nuclear installation owned by the central government, implying it will apply to all other entities, including potential installations set up by state  governments.   

In place of the Pool, the Shanti Act provides for the setting up of the Nuclear Liability Fund to meet the central government’s liability under the Bill. However, unlike the CLNDA, where the government, through the 2011 Rules, took responsibility for compensation beyond the operators’ liability, fixed at ₹1,500 crore, the Shanti Act leaves the role of the government open-ended for multiple contingencies. Accordingly, Section 14 makes it clear that as “the actual liability in the event of nuclear incident would depend on the magnitude of the incident, it is difficult to estimate the cost of liability at this stage”. Echoing the CLNDA, Section 14 of the Shanti Act lists the central government’s liability in respect of a nuclear incident as including (a) where the amount exceeds the liability of an operator, (b) occurring in a nuclear installation owned by the government, (c) or an incident as a result of force majeure. 

In its Second Schedule, the Shanti Act lists the amount of liability for the operator, which, incidentally, is a revised set to reflect the time elapsed since the CLNDA’s promulgation and also adding newer classification. While the CLNDA had fixed the operator’s liability at ₹1,500 crore for an installation of 10 MW or above, the Shanti Act incorporates five categories with higher liability costs: 3,600 MW and above (₹3,000 crore); 1,500-3,600 MW (₹1,500 crore); 750-1,500 MW (₹750 crore); 150-750 MW (₹300 crore); and below 140 MW and other fuel cycle facilities other than spent fuel reprocessing and transport of nuclear materials at ₹100 crore.

  Like in the case of foreign suppliers being absent in its fine print, the Shanti Act also makes no reference to small modular reactors (SMRs), the FBRs, or the advanced heavy water reactor (AHWR), which will form the core of the third-stage of the indigenous programme. This emerges as a major lacuna as the Shanti Act is deemed to have superseded the Atomic Energy Act and the CLNDA, which are described as being “repealed” in Section 91. Accordingly, there will be major operational, legal, and policy shortcomings as India progresses towards the second-stage with FBRs deployed in greater numbers, and seeks to harness the potential of new-generation technologies, including the SMRs. 

It is amusing that despite referring to the three-stage programme in its preamble, the government has sought to keep out any references to the FBRs and the AHWRs in the Shanti Act. It could be assumed that new policy, regulatory, and liability regimes are in order for these technological frontiers in the months or years to come.