SHANTI Act and the Nuclear Liability Debate in India

Revamping Nuclear Liability: The Uneasy Fallout of SHANTI Act 2025

On 23 December 2025, Parliament passed the Sustainable Harnessing of Advancement of Nuclear Technology for India (SHANTI) Act, potentially ushering in a new era for India’s nuclear sector. Among its sweeping changes, the Act controversially nullifies the operator’s “right of recourse” against suppliers, a key provision enshrined in the Civil Liability for Nuclear Damage Act (CLNDA), 2010. This decision, many argue, exposes India’s nuclear liability framework to significant moral hazard risks at a time when climate-resilient energy systems demand the highest safeguard standards.

What the Act’s proponents hail as a pioneering step to attract private sector participation in nuclear energy, critics decry as an imprudent dilution of accountability. At its heart lies a fraught tradeoff: economic liberalisation of the sector at the expense of the safeguards that victims of future nuclear accidents could once invoke. The omission of CLNDA’s Clause 46, which allowed victims to seek compensation through other legal avenues, is emblematic of this shift.

Reworking Governance: New Players, Familiar Concerns

For decades, India’s nuclear energy sector was a government-controlled preserve, with the Nuclear Power Corporation of India Ltd. (NPCIL) and its subsidiary Bharatiya Nabhikiya Vidyut Nigam (BHAVINI) exclusively responsible for nuclear power operations. However, the SHANTI Act allows private players to break this monopoly, ostensibly to scale nuclear energy capacity and meet India’s energy security goals under the broader Net Zero 2070 target.

Central to this operational shift is the indemnification of nuclear suppliers. Under the SHANTI Act, for accidents traced to defective equipment or technology, liability no longer applies to suppliers—unlike the earlier framework, which mandated operators to sue suppliers under specific scenarios. Such indemnity raises questions of moral hazard: incentivising suppliers to cut corners, secure in the knowledge that they will not be held financially accountable for disaster outcomes.

The Act also establishes a dedicated legislative framework for the Atomic Energy Regulatory Board (AERB), a long-overdue demand. However, the independence of this body—critical for its regulatory efficacy—has come under scrutiny. The Act stipulates that AERB members shall be nominated by a committee constituted by the Atomic Energy Commission, an executive body with direct government oversight. This institutional design risks compromising the autonomy of the AERB, leaving room for conflict of interest and political influence.

Liability Dilution: Lessons Unlearned?

The SHANTI Act’s most contentious provisions, however, are those pertaining to nuclear liability. Omission of the “right of recourse” weakens the otherwise cautious liability regime introduced under the CLNDA, 2010. This omission becomes especially worrisome in light of historical nuclear disasters: the Fukushima Daiichi accident (2011) was linked to poor reactor designs from suppliers, the Chernobyl disaster (1986) exposed structural flaws, and closer to home, the Three Mile Island incident (1979) demonstrated how lax supplier oversight could amplify risks.

The Act further introduces “force majeure” exemptions for operators, meaning they are not liable for accidents caused by “grievous natural disasters”. While this aligns with international industrial norms, it departs from India’s longstanding policy of absolute liability for high-risk sectors. The concept of absolute liability, first articulated by the Supreme Court in the Oleum Gas Leak Case (1987), has acted as a crucial preventive mechanism for industries with hazardous potential. Diluting this standard in the nuclear sector—a sector defined by catastrophic risk—underplays the lessons of industrial disasters like Bhopal and Fukushima.

Moreover, the government’s narrative of increased private sector participation merits closer scrutiny. How many private players, even with supplier indemnity, are equipped to handle the intricate technicalities and political sensitivities of nuclear energy investments? The economic logic itself may be overstated given that India’s installed nuclear capacity, at a modest 7,480 MW as of 2023, still accounts for only 3.2% of national electricity generation. Expanding this requires not just legislative reforms but also robust state-led infrastructure investments—areas where clarity is conspicuously absent in SHANTI Act’s provisions.

Comparisons Across Borders: The French Paradigm

France illustrates a telling counterpoint. Despite the country deriving nearly 70% of its electricity from nuclear power, it has staunchly upheld the accountability of suppliers through mandatory reactor certifications and rigorous monitoring. Supplier indemnification is uncommon, and frequent stress tests ensure that both public and private stakeholders meet stringent safety standards. Notably, the French government has retained majority control over Électricité de France (EDF), the state-owned nuclear operator, citing national security imperatives. India’s SHANTI Act, by prioritising supply chain liberalisation over regulatory exactitude, risks widening the gap between ambition and global best practices.

The Centre-State Nexus and Political Landmines

The implications of the SHANTI Act also present significant Centre-State tensions. As per constitutional provisions, land acquisition and public consultation for nuclear power projects fall under concurrent jurisdiction. However, India’s history of project deployment—from Kudankulam in Tamil Nadu to Jaitapur in Maharashtra—underscores the disruptive potential of local opposition. Large-scale displacement, ecological risks, and the absence of inclusive dialogues continue to stoke distrust toward nuclear projects. The SHANTI Act, which bypasses these socio-political realities, risks repeating the delays and public resistance that have dogged India’s nuclear ambitions for over a decade.

Additionally, it remains to be seen how the proposed nuclear insurance pool, a crucial safeguard for compensating victims of disasters, will be financed. While previous frameworks suggested sovereign annual contributions of approximately ₹1,500 crore to such a pool, no funding architecture has been outlined in the SHANTI Act to ensure swift compensation during emergencies. Compared to climate-induced disasters, which demand rapid relief operations, nuclear disasters involve prolonged damage assessments—a fiscal and administrative challenge that remains unaddressed.

Towards Accountability or Adhocism?

Ultimately, success under SHANTI will hinge on how well India incorporates long-term resilience into its nuclear energy pathways. Success metrics could include reduced design defect incidents, accelerated compensation post-disaster, and significantly increased installed capacity contributions to national energy benchmarks. Absent these, the risks of institutional bypassing—seen in lax AERB oversight, vague insurance provisions, and weakened liabilities—could outweigh the economic benefits of sectoral liberalisation.

Until then, India’s nuclear energy ambitions may remain shackled by the structural limitations of governance, leaving unresolved the tension between innovation and accountability.

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