Policy Update
Mansi Tirthani
Background
For more than six decades, India’s civil nuclear program operated under tight statutory regulations. The framework under the Atomic Energy Act of 1962 is restricted to the right to build, own, and operate nuclear power plants to the Central Government and its wholly owned enterprises, primarily being the Nuclear Power Corporation of India Limited (NPCIL) and Bharatiya Nabhikiya Vidyut Nigam Limited (BHAVINI).
While this monopoly was vital for safeguarding technology and managing non-proliferation regimes during periods of international isolation, it created severe capital and technological concerns. Nuclear energy remained stagnant, accounting for a mere 3.1% of India’s total electricity mix, with an installed capacity of roughly 8.78 GW by early 2025. These institutional provisions were in contrast with India’s long-term economic and environmental goals.
Under its modern development strategies, the Indian state set a highly ambitious target of reaching 100 GW of operational nuclear capacity by 2047 to serve as a clean, reliable, round-the-clock baseload power source. The rise of high-performance computing, artificial intelligence networks, indigenous semiconductor fabrication units, and expanding data centers across urban areas highlighted the limits of relying solely on variable renewables like solar and wind.
Further, the public sector alone lacked the fiscal capacity to absorb the huge capital outlays required for simultaneous deployment. Compounding this capital constraint was the structural failure of the Civil Liability for Nuclear Damage Act (CLNDA) of 2010. Specifically, Section 17(b) of the CLNDA granted nuclear plant operators an expansive, mandatory right of recourse against equipment suppliers in the event of an incident caused by defective equipment. This clause deviated from international frameworks, such as the Convention on Supplementary Compensation for Nuclear Damage (CSC), which channels exclusive liability to the operator. This divergence created deep commercial hesitation.
Global nuclear vendors and large domestic engineering conglomerates were heavily disincentivized from participating in the Indian supply chain due to uninsurable, open-ended financial risks. Legislative consolidation became a necessary structural prerequisite to unlock private investment and accelerate project execution.
Functioning
The SHANTI (Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India) Act of 2025 dismantles these long-standing barriers through a triple architecture that balances security with open market participation:
Dismantling the State Monopoly: Under Section 3 of the Act, the government officially opened the civil nuclear value chain to regulated private entities and joint ventures. While the state enforces a 49% equity cap on private or foreign ownership in civilian nuclear projects to retain dominant sovereign oversight, it allows private firms to lead engineering, procurement, and construction (EPC) workflows and plant maintenance. The Act permits private participation in uranium exploration, mining and fuel fabrication, though it reserves highly sensitive fuel-cycle operations such as high-level enrichment, spent fuel reprocessing, and fissile material accounting exclusively for the Central Government.
Overhauling the Liability Regime:
The Act brings India into alignment with global standards by adopting the principle of exclusive operator liability. The automatic, statutory supplier liability that was creating a hindrance for foreign technology transfers under the 2010 law has now been removed. A supplier’s liability is now strictly bound by the financial terms negotiated voluntarily inside operator-supplier contracts, or if the incident results from an act committed with intent to cause harm. To provide predictable risk horizons, the Act introduces a graded operator liability cap linked directly to thermal reactor capacity, moving away from a rigid flat ceiling:
Source: PIB
Independence of the Regulator:
A major change is the granting of full statutory status to the Atomic Energy Regulatory Board (AERB), making it directly accountable to Parliament. By decoupling the safety regulator from the Department of Atomic Energy, which actively promotes nuclear expansion, the Act eliminates a conflict of interest. The AERB is now a legal body with independent licensing, inspection, search, seizure and enforcement powers, elevating India’s regulatory transparency to international benchmarks.
Performance
In the year following its implementation, the SHANTI Act has triggered significant activity across India’s energy sector. The most visible impact is the rapid transition from theoretical joint ventures to active commercial tenders. A primary example is the Anushakti Vidhyut Nigam Limited project, a joint venture between NTPC and NPCIL. According to the Economic Time Report, leveraging the newly resolved liability structures, the entity recently floated a ₹28,000-crore Engineering, Procurement, and Construction (EPC) tender for the nuclear island of the 4×700 MW Mahi Banswara project in Rajasthan. This marks the first time in Indian history that a nuclear project of this scale has been taken away from NPCIL execution, offering domestic infrastructure giants an entry point into core nuclear engineering.
The policy changes have operationalized the government’s newly established Nuclear Energy Mission, which is backed by a ₹20,000-crore budget allocation and aims to deploy at least five indigenously designed Small Modular Reactors (SMRs) by 2033. In tandem with the Bhabha Atomic Research Centre (BARC), private companies have commenced commercial manufacturing blueprints for the 220 MWe Bharat Small Modular Reactor (BSMR-220). Major industrial organizations, including Larsen and Toubro, Tata Power, Reliance Industries, and the Adani Group, have established corporate nuclear divisions for facilitating plant development strategies.
Impact
The impacts of the SHANTI Act extend far beyond domestic energy generation. On the geopolitical stage, the elimination of supplier liability has led to international technology partnerships. Global vendors who previously stalled negotiations due to liability concerns are now reviewing technology-sharing agreements, positioning India as a competitive market for advanced Gen-III+ reactor tech.
Domestically, the 49% equity cap has created a huge market for finance, attracting interest from domestic infrastructure funds and sovereign wealth funds looking for stable, long-term ESG-compliant assets.
From an industrial standpoint, the policy shift accelerates technical capacity building in India’s manufacturing ecosystem. The demand for SMR components is driving the development of high speed metallurgical engineering, heavy robotics, advanced safety instrumentation and AI-driven quality assurance systems. By creating a domestic market, India is building a robust supply chain capable of positioning the nation as a global manufacturing hub for modular reactor components, aligning cleanly with energy industrial development goals.
Key Issues
Despite its progressive architecture, the SHANTI Act faces several operational and safety hurdles. The complete removal of statutory supplier liability for defective equipment remains a point of debate. By centering liability entirely on the operator, the Act reduces financial accountability for international vendors, leaving the public sector to absorb residual risks through the state funded Nuclear Liability Fund if an incident exceeds operator caps. Balancing fast tracked private approvals with the safety standards of the independent AERB also remains a delicate task.
On the financial front, despite the availability of private capital, the commercial insurance market lacks capacity to absorb large-scale nuclear risks. The domestic insurance is currently insufficient to cover the liability requirements of private operators. While the Act permits private participation in upstream mining and fuel fabrication, the complex administrative realities of land acquisition, environmental clearances and local community resistance present persistent bottlenecks that legislation alone cannot fully resolve.
Way Forward
To fully realize the potential of the SHANTI Act, India must adopt a proactive, multi-pronged
Implementation strategy, that is, the operationalization of the Nuclear Liability Fund (NLF), where the Ministry of Finance must move quickly to structure the NLF through a transparent levy on nuclear power generation, building a robust financial cushion to manage extreme tail risks without draining the central fiscal accounts.
Also, the General Insurance Corporation (GIC Re) should lead the creation of the state-backed nuclear insurance pool, partnering with international reinsurers to offer competitive risk transfer products tailored for private operators. transition.The newly empowered AERB must establish highly structured, predictable licensing protocols specifically designed for SMR platforms, shifting from slow, customized project approvals to efficient models. The government must leverage its dominant control over the fuel cycle to set up reliable fuel supply agreements, guaranteeing private operators consistent access to processed fuel rods while maintaining strict non-proliferation safeguards.
By effectively balancing market liberalization with uncompromising safety oversight, India can successfully convert the legislative promises of the SHANTI Act into a sustainable reality by securing its low-carbon energy future and cementing its place as a leader in the global nuclear transition.
References
Dugoua, E., & Moscona, J. (2025). The economics of climate innovation: Technology, climate policy, and the clean energy transition (Working Paper). Massachusetts Institute of Technology. https://economics.mit.edu/sites/default/files/inline-files/handbookchapter-DM-121525.pdf
Next IAS. (2026). India’s nuclear power reforms under the SHANTI Act, 2025. Down to Earth: Fortnightly Analysis, 1–15. https://www.nextias.com/newuploads/Nextias/2026/1/DTE-16-31-Jan-2026.pdf
NITI Aayog. (2026). Scenarios towards Viksit Bharat and net zero – Sectoral insights: Industry. Green Transition, Energy, Climate, and Environment Division, Government of India. https://niti.gov.in/sites/default/files/2026-02/Scenarios-Towards-Viksit-Bharat-and-Net-Zero-Sectoral-Insights-Industry.pdf
Rajya Sabha. (2025, December 18). Synopsis of debates: The Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Bill, 2025. Parliament of India. https://cms.rajyasabha.nic.in/UploadedFiles/Synopsis/SynopsisUpload/Session_269/English_S181225.pdf
Srivastava, D. P. (2026). India-US cooperation in the energy sector. Hoover Institution, Stanford University. https://hoover-s3-website.s3.us-west-2.amazonaws.com/s3fs-public/research/docs/Srivastava_US-IndiaCooperation_web-260608.pdf
Reviewed by
Madhuritha D
Shivali Yadav
About the Author
Mansi Tirthani is the recipient of the National Award by the President of India for her contributions to community services and good governance. She has been Indian Youth Ambassador to China by the Government of India to analyse the startup and innovation ecosystem. Currently serves with the Research and Editorial team at IMPRI, where her work centers on evidence-based policy analysis. With a commitment to advancing welfare governance, she brings together data analysis, strategic communication, and development to impact research and policy.
Acknowledgement:
The author extends sincere thanks to the IMPRI team for their guidance.
Disclaimer:
All views expressed in the article belong solely to the author and not necessarily to the organization.
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