New SHANTI rules to address liability concerns; stage set for attracting big investments in the nuclear sector

The SHANTI Bill (Sustainable Harnessing of Advancement of Nuclear Energy for Transforming India), now before the Parliament, is set to open private participation in nuclear energy production. Currently, NPCIL (Nuclear Power Corporation of India Limited), India's government-owned enterprise under the Department of Atomic Energy (DAE), is the only company entitled to set up and operate nuclear power plants in India. When enacted, Shanti will open up the sector for private participation and will allow any company or joint ventures to build, own and operate or decommission nuclear power plants in India.

Union Cabinet cleared the bill on Friday, and now it's being debated in the Parliament for enactment as an Act. The Atomic Energy Act, 1962 and the Civil Liability for Nuclear Damage (CLND) Act, 2010, will become invalid to pave the way for new rules in running nuclear power plants in India.

Solving liability concerns

One major roadblock cited for attracting investments into the sector was huge liability concerns in the case of accidents. In the new and old rules, maximum operator liability damages remain at Rs 3000 crore. However, the new rules will stipulate maximum damage charges according to the capacity of reactors, thus the operator liability will be less for small capacity reactors. If the earlier rule was Rs 1500 crore as liability charges for all plants above 10 MW, the new bill envisages Rs.1500 crore maximum liability for 1500 MW to 3600 MW plants, Rs 100 crore for reactors upto 150 MW, Rs 300 crore for capacity between 150 MW and 750 MW, Rs 750 crore for capacity between 750MW to 1500MW and Rs 3000 crore for any plant with a capacity above 3600 MW.

''The bill seeks to address a main apprehension by the private sector by introducing clearer operator liability norms (capping at Rs. 3000 crore) along with eliminating the right to recourse on suppliers for defective equipment, that previously deterred private participation'', says Ankit Jain, Vice President and Co-Group Head, Corporate Ratings, ICRA Limited.  The bill largely aligns supplier liability with global practices, he says.

'' It is critical to align civil nuclear liability for operators and suppliers with international standards to attract global technology providers as well as private investors,'' says Anujesh Dwivedi, Partner, Deloitte India.

The bill says that 'the operator shall be liable for damages except those caused by a grave natural disaster of an exceptional character, an act of armed conflict, hostility, civil war, and insurrection or terrorism. the bill also provides for exclusions on damages during the under-construction stages'.

Similarly, earlier rules on liability also held suppliers accountable in case of accidents, which was a constant point of concern for overseas reactor suppliers. The new bill has diluted these stringent provisions to a greater extent.

Concerns remain

''However, the sector faces inherent challenges, including extremely high capital cost (Rs. 16–20 crore per MW), long gestation periods, and plant stabilisation-related issues. Private firms lack operational track record in this domain, raising concerns over execution risks and tariff competitiveness,” points out ICRA's Ankit Jain.

Currently, the tariff for nuclear power is governed by the Department of Atomic Energy (DAE), in consultation with the Central Electricity Authority (CEA). However, private sector participation will necessitate governance by an independent regulator (such as CERC), enabling the possibility of competitive determination of tariffs, says Anujesh Dwivedi of Deloitte India.

''Also, involving the private sector in research and development of nuclear technologies for civil use, such as the development of Small Modular Reactors (SMRs), by allowing the creation of intellectual property rights would be a progressive step and in line with the approach adopted by several developed countries'', he says.

Why the new Act?

With the Atomic Energy Bill 2025, the Government of India intends to allow private sector participation in nuclear power generation to achieve the goal of 100 GW of installed capacity by 2047. India will face a near-tripling of energy demand to 28,000 TWh by 2047, from the current 10,500 TWh and nuclear energy is poised to play a pivotal role in creating non-polluting energy capacity.

In the last decade, India's nuclear electricity generation has increased by about 60%, with installed capacity rising 71% to 8,880 MW, all set up and operated under NPCIL. The new Act will allow plans to start 220 MWe 'Bharat Small Reactors' to decarbonise hard-to-abate sectors and a ₹20,000 crore Nuclear Energy Mission to deploy five SMRs by 2033, mainly led by the private sector.

The 100 GW nuclear vision entails a diversified approach, incorporating large indigenous reactors, international collaborations, and a significant push for Small Modular Reactors (SMRs) and advanced technologies like fast breeder systems and thorium-based fuels.