Beyond liability, the SHANTI Act defers several crucial issues to future rulemaking. Terms such as “strategic nature”, “sensitive activities”, and “national security implications” remain undefined. This matters because activities deemed sensitive may be excluded from patent protection or subjected to alternative regulatory regimes.
Innovation thrives on predictability. For start-ups and firms investing in SMRs or next-generation reactors, uncertainty over intellectual property rights or regulatory classification could deter research and development. Excessive discretion, even if well-intentioned, risks chilling private initiative.
Multiple Regulators and Fragmented Oversight
The Act also allows for the creation of additional regulatory bodies for activities deemed strategic. While heightened oversight may be justified in certain cases, open-ended provisions risk regulatory fragmentation. Investors could face overlapping jurisdictions, shifting compliance requirements, and prolonged approval timelines.
International experience suggests that in sensitive sectors, stability and clarity matter more than layered control. Without careful rule design, multiplicity of regulators could become a source of friction rather than assurance.
Is the Nuclear Regulator Truly Independent?
Although the AERB gains statutory backing, concerns about autonomy persist. Member appointments remain routed through structures linked to the Department of Atomic Energy. In contrast, regulatory best practices in India—as articulated by bodies such as the Financial Sector Legislative Reforms Commission—emphasise independent search committees and functional separation from executive influence.
Perception matters as much as formal authority. Whether the regulator is seen as independent will significantly influence investor trust and international cooperation.
Pricing Power and the Electricity Act Anomaly
Perhaps the most contentious provision is Section 37, which vests pricing authority for nuclear electricity in the central government, overriding the Electricity Act, 2003. This creates an anomaly in India’s power sector, where tariffs are otherwise determined through independent regulatory commissions.
Once electricity enters the grid, its source does not alter its economic characteristics. Administered pricing risks burdening already stressed distribution companies and could make nuclear power politically contentious and financially unattractive.
A Market-Based Path Forward
Ironically, nuclear power’s high capital cost makes it well-suited to market-based solutions. Large industrial consumers, data centres, special economic zones, and global capability centres increasingly seek reliable, round-the-clock clean energy. Small modular reactors, in particular, are designed for such captive or semi-captive use.
Allowing private nuclear generators to directly contract with such consumers—through long-term power purchase agreements—could unlock demand without distorting the broader power market. Legislative amendment or calibrated exemptions to Section 37 could reconcile nuclear expansion with power sector reform.
Conclusion: Law as Foundation, Not Destination
The SHANTI Act lays down a bold and overdue legislative foundation for India’s nuclear renaissance. It signals openness, alignment with global norms, and recognition that state monopoly is no longer viable. Yet, laws do not transform sectors on their own.
The Act’s true test lies in the details that follow: clarity in liability, restraint in regulation, independence in oversight, and rationality in pricing. If uncertainty persists, investor enthusiasm may wane. If addressed with foresight and balance, the SHANTI Act could finally allow nuclear energy to play a meaningful role in India’s climate commitments, energy security, and technological leadership.
In that sense, the reform is not an end, but a beginning—one that will succeed only if India matches legislative ambition with regulatory wisdom.
Month: Current Affairs - December 30, 2025
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