India’s New Civil Nuclear law makes entry of foreign players easier

By Ajay Kaul

New Delhi, Jan 5 (BVI) India recently took a major step aimed at attracting foreign players in the country’s expanding civil nuclear sector as it enacted a law which revised an old legislation to largely exempt suppliers from liability unless specifically mentioned in individual contracts.

The SHANTI Act (Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Act, 2025), passed by Parliament last month, replaces the Civil Nuclear Liability Act of 2010 which laid down that a supplier would be liable in case of a mishap on account of faulty material. It, however, had a rider that the liability cannot be unlimited and for an unending period.

The SHANTI Act, projected as a major overhaul of India’s nuclear energy sector, is aimed at expanding nuclear power generation and allowing more players, including private firms, to build and operate parts of the nuclear value chain.

Howeve, certain activities, like uranium enrichment, will remain with the government.

The 2010 Act was brought two years after the 48-nation Nuclear Suppliers Group (NSG), the nodal watchdog governing international commerce in civil nuclear field, allowed India to conduct trade in this sector, making a special exemption as New Delhi is not a signatory to the Nuclear Non-Proliferation Treaty (NPT).

The NSG unanimously granted the exemption against the backdrop of India signing a landmark Civil Nuclear Agreement with the US in 2005.

The provision of supplier’s liability was incorporated in the 2010 Act against the backdrop of radiation leak in a nuclear plant in Fukushima in Japan earlier that year after the facility located at a coast was hit by tsunami. That incident had created a global scare related to the nuclear facilities.

The clause regarding the supplier’s liability was made part of the 2010 Act also because of the catastrophic experience of the 1984 Bhopal Gas tragedy, when a deadly toxic gas leaked from Union Carbide plant in the capital of Madhya Pradesh, killing 3000 people and causing serious ailments to tens of thousands.

The Liability clause in the 2010 Act became a major hurdle in the way of entry of foreign suppliers in India’s civil nuclear field, thus constraining the growth of this critical sector.

Serious concerns were expressed particularly by the US, France and Russia over the Liability provisions pertaining to section 17 (a), (b) and (c) of the 2010 Act, which held operator responsible in case of any accident and in turn, allowed the operator (which is the Indian government-run NPCIL) to sue the supplier for damages.

These countries were unhappy as their companies were eager to enter the Indian civil nuclear sector but possibly held back because of the liability clause.

Under the new Act, the liability for nuclear damage is that of the plant operator. The suppliers have been made immune, unless a contract clearly specifies the liability aspect.

Amending the 2010 law, the SHANTI Act provides for tiered limits of liability based on reactor size (up to ₹3,000 crore for large reactors), with the Central Government covering damages beyond the caps.

The tiered liability caps are: Rs 100 crore for a reactor of up to 150 MW and up to Rs 3,000 crore for larger plants of up to 3600 MW.

The government will pay for damages exceeding the operator’s capped liability and it will funded by a Nuclear Liability Fund.

The SHANTI Act also lays out that operators would have to maintain insurance or financial security for their capped liability.

The new law also provides for limited supplier recourse, unlike the 2010 Act.

In case of any disputes, the law mandates establishment of an Atomic Energy Redressal Tribunal for faster resolution.

Rationale behind the new Act:

According to the government, the new law is a “modern” and “comprehensive” legislation which ensures that the country’s nuclear framework is in tune with present-day needs and future ambitions.

The nuclear energy, which is a clean form of fuel, has been a small component in the country’s electricity mix, consistently accounting for around 3% of total power generation, with a share of 3.1% in 2024–25.

With the country’s economy growing and expanding, there is a need for increasing the output of nuclear power, which will require major foreign investment.

With massive developmental activities underway in the country, round-the-clock electricity is vital to help the process.

The present nuclear capacity stands at 8.78 GW and with the indigenous 700 MW and 1000 MW reactors being developed through
international cooperation, the capacity is projected to rise to 22.38 GW by 2031–32. The target is 100 GW of nuclear power capacity by 2047.

The new law is intended to pave the way for increase in nuclear power production with ample private participation.

Key aspects of the Act:

— All activities that involve radiation exposure must obtain prior safety authorisation from the regulatory authority.

— Certain sensitive nuclear fuel-cycle activities are reserved exclusively for the Central Government or its wholly owned
institutions. These include enrichment or isotopic separation of prescribed or radioactive substances (unless otherwise notified), management of spent fuel such as reprocessing, recycling, radionuclide separation, and high-level waste handling, production and upgradation of heavy water, and any other facilities or activities specifically notified by the Government.

— Establishment of a structured system for granting, suspending, or cancelling licences and safety authorisations for nuclear energy production and use.

— In contrast to existing laws that impose a single statutory cap on operator liability, the SHANTI Bill establishes a graded liability framework. Under this framework, the limits on operator liability are detailed in the Second Schedule of the bill and vary according to the type and characteristics of the nuclear installation.

— Provision for a regulatory framework for the use of nuclear and radiation technologies in health care, agriculture, industry, research, and other peaceful applications.

— Allows exemption from a license for limited activities like research, development, and innovation-related work.

— Introduces a practical and balanced civil liability regime for addressing nuclear damage.

— Grants formal statutory recognition to the Atomic Energy Regulatory Board (AERB) to strengthen regulatory independence and authority.

— Vests exclusive acquisition rights with the Central Government in specific cases related to nuclear activities.

— Establishes an Atomic Energy Redressal Advisory Council to facilitate the redressal of disputes.

— The Appellate Tribunal for Electricity, set up under the Electricity Act, 2003, will serve as the appellate authority, empowered to hear appeals under provisions of the bill and any additional matters as notified by the Central Government.

— Empowers the Central Government to appoint Claims Commissioners for adjudicating compensation claims related to nuclear damage.

— Provides for a dedicated Commission to handle cases involving severe nuclear damage and ensure timely adjudication.

— The Act lays a strong emphasis on maintaining India’s strategic control over its nuclear ecosystem.

— Even as the sector opens up to private participation, the Bill ensures that critical functions
remain firmly under sovereign oversight.

— The Government retains exclusive authority over the nuclear fuel cycle, waste management, and all security-related operations.

— The nuclear energy sector in the Act is structured in a way that does not compromise national security or India’s independent decision-making.

— There is provision for enhanced safeguards and monitoring systems ensure consistent compliance across all nuclear activities.

In conclusion, the new Act supports the country’s long-term vision of expanding clean, reliable energy while ensuring that strategic interests remain fully protected. (BVI)