Sagarika Shankar – Senior Associate
India’s enactment of the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Act, 2025 (“SHANTI ACT”) represents a significant recalibration of its nuclear energy governance framework. The legislation replaces the existing laws on nuclear energy – Atomic Energy Act, 1962 and the Civil Liability for Nuclear Damage Act, 2010, Act.
India has set an ambitious target to achieve energy independence with a roadmap for decarbonisation of the economy by 2070 and to achieve 100 Giga Watt of nuclear power capacity from the current capacity of 8.8 Giga Watt by 2047. Existing statutory frameworks designed for a state-dominated nuclear sector, have proven insufficient to accommodate emerging technological, financial and institutional realities – necessitating a comprehensive legislative overhaul. The SHANTI Act, introduced at the most appropriate time, functions as a structural enabler, breaking the long-standing monopoly of the Central Government by allowing private participation in nuclear power generation, unlocking capital flows, and diversifying the country’s nuclear technology portfolio without compromising safety or state oversight.
The SHANTI Act now authorises (i) Indian Companies (companies incorporated outside India are expressly excluded), (ii) Joint ventures between government entities and private companies, and (iii) other persons expressly permitted by Central Government to undertake specified nuclear activities through mandatory licensing and obtaining safety authorisation.
While the SHANTI Act enables private participation in nuclear energy production, it expressly subjects such participation to stringent governmental oversight. The Central Government retains control over sensitive and high-risk nuclear functions such as mining of prescribed substance, source material whether produced within India or imported, accounting of nuclear fuel, enrichment and isotopic separation of radioactive substance, spent fuel reprocessing, high-level radioactive waste management, heavy water production and other activities that may be notified by the Central Government from time to time. By the Central Government maintaining exclusive control over critical functions while supervising permitted private participation and being empowered to frame various national policies in relation to the nuclear energy production, the SHANTI Act seeks to balance innovation and investment with uncompromising safety, and public interest safeguards. The SHANTI Act further lists out the grounds for suspension, modification, and cancellation of licence and safety authorisation and the actions the Central Government or the Board may take pursuant to the aforesaid for ensuring compliance with safety, security, safeguards and liability requirements.
The SHANTI Act confers wide-ranging acquisition powers upon the Central Government. Under the Act, Acquisition rights automatically vests with the Central Government in respect of prescribed substances, radioactive materials, mines, minerals, equipment, or plants connected to nuclear energy. In particular, where a nuclear plant or reactor is abandoned at any stage after commissioning or initial fuel loading, all associated assets shall vest in the Central Government, free from all encumbrances. This statutory vesting mechanism is intended to ensure continuity of governmental control and to prevent stranded nuclear assets from remaining in private hands in a manner that could pose public safety or environmental risks.
A critical reform under the SHANTI Act is the grant of the statutory status to the Atomic Energy Regulatory Board (“AERB”). AERB is now empowered to regulate the entire spectrum of nuclear and radiation activities: notifying the limits of radiation exposure, granting and revoking licenses, enforcing safety standards, overseeing investigations.
The liability regime under the SHANTI Act, 2025 is clearly and comprehensively defined. The liability for any nuclear incident is strictly and exclusively channelled to the operator and largely retains the no-fault liability principle introduced under the Civil Liability for Nuclear Damage Act, 2010. Operators are liable for nuclear damage, subject to specified exclusions such as grave natural disasters or armed conflict. The Act introduces a tiered liability structure with caps ranging from Rs. 100 crore to Rs. 3,000 crore depending on the power capacity of the installation – replacing the earlier uniform cap. Where operator liability is exceeded, or where the nuclear damage is caused due to grave natural disaster or armed conflict, the Central Government assumes liability. The Act empowers the Central Government to establish a Nuclear Liability Fund to meet excess compensation obligations and to access international mechanisms such as the Convention on supplementary compensation for Nuclear Damage signed at Vienna. The Act further mandates the operators to maintain adequate financial security or insurance, as applicable to their nuclear power plants, to meet compensation obligations.
Perhaps, the most consequential reform is the removal of the statutory supplier liability. Under the earlier regime, operator’s had a statutory right of recourse against suppliers for defective equipment or sub-standard services. However, under the SHANTI Act, the operator shall have a right to recourse only where such right is expressly provided for in the contract signed between the two parties or where the nuclear incident has resulted from the act of commission or omission of a person done with the intent to cause nuclear damage. Therefore, any right of recourse must be expressly negotiated and embedded in commercial contracts. This change directly addresses the long-standing concerns of foreign and domestic suppliers.
The Act establishes an Atomic Energy Redressal Advisory Council (“Council”) to address disputes and grievances arising out of regulatory or licensing decisions or orders of the Central Government or AERB. Appeals against the order of the Council or penalty imposed by the adjudicating officer shall be preferred to the Appellate Tribunal for Electricity, within thirty days from the date of receipt of order. Further, an appeal against the order of the Appellate Tribunal shall lie before the Supreme Court.
For compensation claims arising out of nuclear damages, the Act provides for a Nuclear Damages Claims Commissioner to be appointed to adjudicate the claims and compensation. The Act empowers the Central Government to establish a Nuclear Damages Commission when the nuclear damage is severe. Under the 2010 Act, compensation may be claimed for damages within India’s territory or its jurisdiction. However, the present Act extends the coverage to nuclear damage in the territory of a foreign state from incidents in India, subject to certain conditions. The Claims may be filed by injured persons, property owners, legal representatives, or authorised agents. The claims shall be filed within 3 years from the date of knowledge of nuclear damage. On receipt of an application for compensation, the Claims Commissioner after giving notice of such application to the operator and giving an opportunity of being heard, shall dispose of the application within a period of 3 months from the date of such application and make an award accordingly. The right to claim compensation for nuclear damage shall extinguish, if such claim is not made within a period of (a) ten years, in the case of damage to property (b)twenty years in the case of personal injury to any individual.
The Civil courts are expressly excluded from adjudicating any dispute in respect of which the Central Government, the Board, the Nuclear Damage Claims Commission or the Claims Commissioner is empowered to adjudicate under the Act. This institutionalises a sector specific mechanism.
It is important to note that the Central Government retains exclusive power to fix tariffs for electricity generated from nuclear power plants. While this ensures price stability and public-interest oversight, its practical impact on private investment will depend on whether tariff norms adequately reflect capital costs, risk allocation and long project gestation periods.
The SHANTI Act promotes research, development, design and innovation in matters related to nuclear energy and radiation for the peaceful use, except for the activities of sensitive nature which are exclusively reserved for the Central Government. Another paradigm shift lies in the intellectual property. Under the earlier regime, no patents were granted for inventions relating to the production of atomic energy. But under the new legislation, patents can be granted for inventions, which in its opinion of the Central Government are for the peaceful uses of nuclear energy, provided that inventions which are sensitive in the opinion of the central government or having national security implications, shall not be patentable and such inventions shall be deemed to have been made by the Central government.
Further it is imperative to note that, the Act provides for a strong overriding clause, which establishes the Acts supremacy over other laws in case of inconsistency.
The SHANTI Act, 2025 represents the most comprehensive nuclear energy framework in over six decades. Its ultimate impact, however, will depend on effective implementation, particularly in areas such as licensing efficiency, regulatory supervision, devising and implementing national policies, tariff determination, insurance capacity. If these are addressed, this new legislation could elevate nuclear power to a strategic role in supporting India’s long term clean energy objectives.
