 "Nuclear Energy")
With the new nuclear energy law, Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI), finally coming into force, India has taken the first step to join the modern age of nuclear power generation and commerce. In this, it will be helped by provisions that seek to strike a balance between a stable and predictable investment environment and a strong regulatory regime cementing safety and security of critical infrastructure and their operations.
That basic framework in place, what would the country’s nuclear power sector look like in the years to come? How soon before nuclear technology starts playing the hoped-for decisive role in boosting nuclear power generation capacity from a meagre 8.7 Gigawatts (Gw) at present to 100 Gw by 2047?
Experts say the enactment of the SHANTI law is a landmark development for nuclear energy in India. It gives the country a single harmonised law for nuclear power in place of the Atomic Energy Act, 1962, and Civil Liability for Nuclear Damage Act (CLNDA), 2010.
Opening up
This essentially means nuclear power will now be open to participants beyond the central government and its entities through the introduction of a transparent licensing framework, supported by an independent regulatory architecture to enable efficient governance and competitive determination of tariffs.
“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. 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,” said Anujesh Dwivedi, partner at accounting and consultancy firm Deloitte.
Another significant and progressive aspect of this reform is the opening up of research, development, design, and innovation in nuclear energy for peaceful purposes, including advanced technologies such as small modular reactors, which can be undertaken without the requirement of any 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 told Business Standard.
The law also removes ambiguities that existed in the past laws regarding potential multifarious jurisdiction over the claims and liability regime.
This has been done by giving statutory recognition to the Atomic Energy Regulatory Board (AERB), with nuclear damage claims adjudication vested with the Claims Commissioner and the Nuclear Damages Claims Commission, whose appeals shall lie before the Appellate Tribunal for Electricity. It excludes jurisdiction of civil courts over such matters and gives an overriding effect 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. The law 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).
In order to achieve India’s target of 100 Gw of nuclear power capacity by 2047, the new law allows eligible private companies and incorporated joint ventures to apply for licences to construct, own, operate and decommission nuclear power plants and reactors. Experts point out that 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.
Who can participate?
The law governing entry into the nuclear power sector undergoes a shift.
Under the 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 new legislation permits a wide category of persons including government departments and institutions, government companies, any other company, joint ventures, 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.
They can also 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 licenced activities involve potential radiation exposure, a separate safety authorisation is also required.
However, JSA’s Kapur pointed to an important exclusion: “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.
Significantly, the new law also ensures sovereign control over critical nuclear materials. Clause 3 draws a clear line around strategic nuclear functions, reserving certain activities exclusively for the government or its wholly-owned entities. These include uranium enrichment or isotopic separation, spent fuel management including reprocessing and waste handling, and the production and upgrading of heavy water. However, it permits licensed private entities to engage in the fabrication of nuclear
fuel, including conversion, refining and enrichment of uranium-235, but only up to a threshold value notified by the government.
Clause 5 retains sovereign ownership and control over uranium and thorium at the upstream stage. It mandates that exploration, mining and decommissioning of mines containing uranium or thorium may be carried out only by the government or its controlled entities, and that all uranium and thorium mined or extracted vest in the government and cannot be sold, ransferred or disposed of without prior approval.
“Read together, Clauses 3 and 5 reflect a calibrated allocation of rights and responsibilities under the SHANTI Act, designed to facilitate participation while maintaining robust oversight and safeguards,” Kapur said.
Liability
Another essential change introduced by the new legislation is regarding the liability of the operator and the supplier.
Previously the CLND Act 2010 set out a two-tier liability framework. Firstly, it capped the maximum liability for each nuclear incident at the rupee equivalent of 300 million Special Drawing Rights (SDRs), with the government empowered to take additional measures where the compensation payable exceeds this amount. Secondly, it fixed operator-specific liability limits 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 the 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 law states that the operator's liability in the case of an incident is limited to ₹3,000 crore for reactors with thermal power above 3,600 Megawatt; ₹1,500 crore for reactors with thermal power of 1,500-3,600 Mw; ₹750 crore for reactors with thermal power od 750 Mw-1,500 Mw; ₹300 crore for reactors with thermal power of 150 Mw-750 Mw; and ₹100 crore for reactors having 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’s liability, the new law addresses concerns relating to ambiguity by restricting the operator’s right of recourse to two limited circumstances — in cases where it is expressly provided for in a written contract, and where the nuclear incident results from an individual’s intentional act to cause 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 clause under which liability for defects or delays is capped at a specified percentage of the contract value, as also nuclear liability insurance. By aligning statutory recourse with contractual risk allocation, SHANTI brings greater predictability to supplier exposure and aligns India’s nuclear liability framework with international best practice,” JSA’s Kapur said.
Clearly, India’s new nuclear law definitely opens a new era for India in the context of providing the essential legal and regulatory framework for the development of nuclear power capacity.
However, the success of these reform measures will lie in the timely commissioning of projects — nuclear plants typically take more than 12 years for commissioning as against 3-4 years for coal-based projects and around 2 years for solar power plants.
Safety is another factor future generations will use to judge this transformation.
Nuclear laws
Atomic Energy Act 1962 /CLND 2010
SHANTI Act 2025
Participants
Only the central government can produce, develop, use and dispose of atomic energy
Any central govt department, public sector company, any other company, or a joint venture among any of these, or any other person permitted can apply for licence to build, own and operate nuclear plants; undertake uranium enrichment; transport and store nuclear fuel; and import and export equipment and technology
Liability
Any compensation liable to be paid by an operator for nuclear damage shall not have the effect of reducing the amount of liability in respect of any other claim for damage under any other law
Provision scrapped
Nuclear incident
The operator shall have a right of recourse where (a) such right is expressly provided for in a contract in writing; (b) the nuclear incident has resulted as a consequence of an act of supplier or his employee, which includes supply of equipment or material with defects or sub-standard services, (c) the nuclear incident has resulted from the act of commission or omission of an individual done with the intent to cause nuclear damage
The operator shall have a right of recourse where (a) such right is expressly provided for in a contract in writing; or (b) the nuclear incident has occurred as a result of commission or omission of an individual with an intention to cause nuclear damage
