India’s nuclear energy sector is at a historic inflection point. With the enactment of the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act , the country has undertaken its most consequential reform since the Atomic Energy Act of 1962. For six decades, nuclear power in India remained a state monopoly—strategically insulated, but operationally constrained. The SHANTI Act decisively breaks with this legacy by opening the sector to private participation, reforming civil nuclear liability, and seeking convergence with global regulatory norms. Yet, the Act’s transformative potential will depend not on legislative intent alone, but on how unresolved questions of regulation, liability, and pricing are ultimately settled.
The Legacy of State Monopoly and the Case for Reform
India’s post-independence nuclear programme was shaped by security imperatives. The Atomic Energy Act of 1962 concentrated control in the State to safeguard strategic autonomy. While this ensured oversight, it also limited scale, innovation, and access to private capital. As a result, nuclear power’s share in India’s energy mix stagnated at under 3%, despite the country’s rising electricity demand and climate commitments.
In contrast, global experience shows that nuclear expansion—whether in France, the United States, or South Korea—has relied on private participation, robust regulation, and predictable liability frameworks. The SHANTI Act reflects recognition that India’s earlier model was ill-suited to the demands of energy transition, decarbonisation, and technological advancement.
Opening the Sector: A Structural Break
At its core, the SHANTI Act replaces monopoly control with a licence-based regime that allows private firms to generate nuclear electricity under regulatory supervision. This marks a conceptual shift: nuclear energy is no longer viewed solely as a strategic domain, but also as a civilian infrastructure sector capable of market participation.
Equally important is the decision to grant statutory status to the Atomic Energy Regulatory Board (AERB). Regulatory credibility is central to investor confidence, particularly in high-risk sectors. While the Act does not fully resolve concerns about independence, it acknowledges a long-standing weakness in India’s nuclear governance architecture.
Civil Nuclear Liability: From Exceptionalism to Alignment
The most far-reaching reform under the SHANTI Act is the overhaul of civil nuclear liability. India’s Civil Liability for Nuclear Damage Act, 2010, was shaped by the trauma of the Bhopal gas tragedy and sought to impose accountability across the supply chain. Section 17(b), which allowed operators recourse against suppliers, made India an international outlier.
This provision deterred global suppliers from participating in Indian projects, stalling flagship initiatives such as the Jaitapur and Kovvada nuclear power projects. By narrowing supplier liability to cases of explicit contractual recourse or intentional wrongdoing, the SHANTI Act brings India broadly in line with the Convention on Supplementary Compensation. In doing so, it removes one of the most significant structural barriers to foreign collaboration.
The Unresolved Question of “Who Is a Supplier?”
Despite this progress, a critical ambiguity remains. The Act does not define who qualifies as a “supplier”. Modern nuclear projects involve complex supply chains, including designers, component manufacturers, software providers, and quality assurance firms. Without statutory clarity on how liability is apportioned across this chain, uncertainty persists.
For insurers and overseas vendors, ambiguity translates into risk. The absence of a clear definition could undermine the very confidence the reform seeks to generate, particularly for advanced technologies and small modular reactors (SMRs) that rely on distributed supply ecosystems.
Regulatory Design and the Problem of Discretion
Month: Current Affairs - December 30, 2025
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