India's new nuclear liability law - SHANTI Act, 2025

On 17-18 Dec, 2025 the Indian parliament passed the Sustainable Harnessing and Advancements of Nuclear Energy for Transforming India (SHANTI) Act. There was little debate in main stream media on this bill before it was tabled. In prime minister's independence day speech in August he had mentioned about reforming India's nuclear power generation sector. Ever since the Indo US nuclear deal which was signed in 2008, it was hoped by US nuclear energy suppliers that they will be able to participate in growing Indian nuclear energy sector. After all new nuclear power plant construction had almost ground to halt in US ever since the 3 mile disaster in 1979. New reactor projects started only after 2013. India was seen as a new untapped market for US companies. 

The Fukushima nuclear disaster of 2011, however, put the nuclear power industry world wide under greater public scrutiny. Ever since the start of nuclear power generation in the mid of 20th century this industry has thrived on socializing the liability of nuclear power accident which is significant in case of a disaster and largely seen as uninsurable without public funds. The industry in most of the countries has followed a capped operator liability regime with channeling of all liability to the operator and no liability on the suppliers. Countries where public opinion has been sensitive to nuclear disasters like Japan, Russia, Germany and Finland follow a strict, no fault,  unlimited operator liability regime. Strict and no-fault means that the claimants need not prove that the operator is at fault of the nuclear accident to be able to claim damages. Unlimited liability means that there is not cap or limit on the liability of the operator. It should be noted that even in countries where a capped liability regime exists, a steady movement towards increasing the cap amount and shifting more liability to the industry from the society is in progress. 

The estimated total cost of the Fukushima nuclear disaster is in the range of $ 190-200 billion. The Japanese Law for compensation for nuclear damages has unlimited, strict no-fault operator liability, the operator needs to provide a security deposit of 120 billion Yen to the government and separately also have a liability insurance. Any person suffering from nuclear damage has priority over other creditors in respect of compensation from the amount provided by the liability insurance contract. There is right to recourse to a third party, where the employees of a nuclear operator have suffered nuclear damage and such damage was caused intentionally by a third party, the nuclear operator who has paid compensation for work accidents to the employees or families of the deceased shall retain a right of recourse against such third party.

The Price-Anderson Act of USA provides for $13.6 billion no fault liability without cost to the public or government Interestingly under the US Energy Independence and Security Act 2007, if an accident occurred outside the USA, nuclear suppliers would be required to reimburse the federal government for the amount allocated to the USA under the CSC’s formula for second-tier coverage.

As noted earlier the world over in the course of time the liability regime has changed in the way that International liability laws have moved the onus of insurance from the society to the industry. Also the amount of liability has been increasing. In such an environment, India's SHANTI Act stands out for not only reducing the liability amount compared to previous regime but also shifting the onus from industry to the state. For instance in 2004, contracting parties to the OECD Paris (and Brussels) Conventions signed Amending Protocols which removed the required for states to set a cap on liabilities. Thus allowing states to have unlimited liability just as Japan. Though these amendments are yet to be ratified in absence of Industry's agreement, we can see that the governments around the world are recognizing the need to expand the scope of liability of nuclear accident where as India has moved in the opposite direction.

We have to analyze this new law in this background. Let us note the major changes that have taken place in the SHANTI act:-

1) The strict no-fault liability clause which was part of the CLND act 2010 has been removed from the SHANTI Act. Earlier law had this clause in the Liability of Operator section "(4) The liability of the operator of the nuclear installation shall be strict and shall be based on the principle of no-fault liability.". This clause has been totally removed from the SHANTI ACT

2) The Operator liability for small and medium power plants has been reduced by introducing a graded system in which plants less than 150 MW the operator liability has been reduced to merely Rs 100 Crore from a Rs 1500 Crores in the earlier act of 2010. The maximum lability for plants more than 3600 MW has been increased to Rs 3000 Crores. One would expect that with inflation and in light of global trend the liability amount should increase not decrease.

3) The operator right to recourse to a supplier liability has been removed. CLND had the clause " (b) the nuclear incident has resulted as a consequence of an act of supplier or his employee, which includes supply of equipment or material with patent or latent defects or sub-standard services; ". This has been removed.

4) Patent regime in the nuclear sector has been changed. Since 1962 any invention in the field of nuclear energy was not patentable. As per patents act 1970 "No patent shall be granted in respect of an invention relating to atomic energy falling within sub-section (1) of section 20 of the Atomic Energy Act, 1962." As per clause 38 of the new law inventions in nuclear energy are now patentable. "38. (1) The Central Government may grant patents for inventions which in its opinion are for the peaceful uses of nuclear energy and radiation:"

Patent restriction ensured that all innovation and development of technologies in nuclear science remained strictly in public interest. It did monopolize the nuclear energy sector, limited private investment and but it also enabled India to freely develop technologies in public interest which, may have been patented outside of India and hence denied to it in practical terms. The removal of the patent restrictions will benefit companies to be able to market their patented technologies like fuel in India. Reduction of operator liability to almost a pittance for small reactors will transfer the liability for Small Modular Reactors, which is seen as a new growth sector, from the industry to the society. Removal of supplier liability clause will remove the operator's right to recourse against the technology supplier for any disaster, opening the door for foreign suppliers to freely enter the nuclear energy market with lesser financial risk. 

However what stands out most egregiously is the removal of the strict, no-fault, liability clause from the nuclear liability law. If following the international standards of liability was the justification of removing the supplier liability clause then the strict and no-fault liability clause is a long standing feature of nuclear liability laws world over. Its removal is quite inexplicable. So is reduction of liability cap where as the world over the movement is towards increasing the cap and moving more and more liability towards the Industry. Unlimited operator liability is also long standing international practice followed in major Nuclear energy states like Japan, Russia and Germany. One could justify its introduction on the account of the very high estimated cost of the latest large nuclear disaster which was in Fukushima nuclear plant. In fact the central government in the Financial Memorandum section of SHANTI Act it self states "Clause 14 of the Bill provides for the liability of the Central Government in the event of a nuclear incident. However, as the actual liability in the event of nuclear incident would depend on the magnitude of the incident, it is difficult to estimate the cost of liability at this stage. The Central Government has established a Nuclear Liability Fund for the purpose of meeting its liability under the Bill. "  

Finally I would remind the reader to what I had explored in my previous article. In last few years one person from India's nuclear energy establishment who stands out in promoting nuclear power industry is Dr Anil Kakodkar. He has been most active in his public writings about building small modular reactor and thorium based fuel. It should to be noted that Dr Kakodkar has been associated with a US company "Clean Core Thorium Energy Inc" as an advisor for development of a thorium based fuel which has been named ANEEL after him. He has been seen promoting private investment in the nuclear power generation sector in India, both before and after the SHANTI act has been passed by the parliament. Clear Core Thorium Energy had a partnership with India's L&T and NTPC is also expected to acquire a minority stake it in. This company is seen as the first beneficiary of the new SHANTI Act. For More about ANEEL fuel read here.

PS: Readers would be interested in the parliament debate on SHANTI Bill. The speech by Mr Shashi Tharoor stands out in articulating many relevant points. 

Mowing the Grass in Iran

The US-Israeli air raids in Iran raised questions about the reason and objectives of this latest war in West Asia. Various justifications and objectives were shared primarily by the US government which really appeared as an after thought rather than a well articulated justification. Ever changing objectives makes it difficult to predict how far this war will go and for how long. However it should not be difficult for any observer of the Israeli actions in its neighborhood that this is nothing but a "Mowing The Grass" war. The objective of Israel is to reduce the military apparatus of Iran as much as possible while Iran is at its weakest. 

The second Trump administration has more or less followed the recommendation of the 100 days plan prepared by the advocacy group United Against Nuclear Iran(UANI). Which involved recommendations like Psyops, anti regime protests, using Starlink for information dissemination inside Iran, declared policy of use of force by US, transfer of refuelers and bunker busters to Israel. weaponizing Arab states, targeted assassinations, encourage defection in military, target IRGC via cyber and kinetic means. US defense secretary Pete Hegseth has long been associated with UANI hence his presence in the second Trump administration would have been a decisive factor in US finally being persuaded to engage in military action against Iran first in the June 2025 12 day war and now a repeat war with objectives beyond merely the destruction of Iran's nuclear infrastructure.

Since there are no clear end goals of this second Iran war it is expected that when both sides are exhausted enough, US and Israel will declare the objectives met and a much weaker Iranian government will survive and will be left licking it's wounds. Iran has indicated that such an outcome is not in its interest as it does not want to be faced with another war a few months or years down the line and hence would like to impose an unacceptable cost on US and Israel before it stops its hostilities. 

While the war has been initiated by Israel and USA it did not take long for other western powers to indirectly or directly endorse this US-Israeli action. Amongst western nations only Spain has has openly opposed this war calling it an illegal war. Opposition from Russia and China was expected who are believed to have joined in to provide direct assistance to Iran's war effort in terms of ISR.

Gulf monarchy's have borne the bulk of Iran's retaliation in this war. Iran had earlier warned that any war imposed on it will result in a regional war and that is precisely what it has hoped to do with its war strategy. Knowing fully well that Israel is better prepared for this war and perhaps calling out the duplicity of the Gulf states which wanted all the benefit of having a weakened Iran in West Asia without necessarily engaging in direct confrontation with it, Iran decided to attack US defense infrastructure in the Gulf states. It has a large number of missiles and drones to effect this strategy which involves using up its old missile and drone arsenal first while dying up the air defenses of its adversaries before moving on the newer age weapons. 

UAE and Bahrain have so far suffered the bulk of Iranian attacks. UAE perhaps because of its recognition of Israel and Bahrain because of hosting the head quarters of US 5th Fleet. Civil infrastructure in these states has not been spared either with Iranian attacks being reported in residential building, hotels, airports, oil storage facilities and even water desalination plant in Bahrain. Oil tankers and commercial ships in the Straits of Hormuz have been attacked by both sides and Natural Gas production in Qatar has been stopped. Russia's energy sector has benefited temporarily from this war since it has emerged as one of the primary remaining viable sources of energy for the energy hungry economies of Asia.  

Ever since the October 7 2023 Hamas atrocities, Israel, with US help has systematically dealt with its neighboring adversaries who were primarily financed and endorsed by Iran in Gaza, Syria and Lebanon. Then last year it went after the nuclear infrastructure of Iran to destroy its capability of developing nuclear weapons. One cannot reliably say whether Iran did not have stockpile of nuclear weapons already when Israel attacked its nuclear infrastructure in June 2025 in the so called "Twelve Day War". However one can reliably say that if it did have a bomb, the numbers were perhaps not substantial yet. Leaving only a small window of opportunity for Israel and USA to destroy Iran's nuclear infrastructure before it could enrich sufficient quantities of fissile material for creating a bigger weapon stock pile. 

One should also not overlook that this action took place not so long after India's operation Sindoor which demonstrated not only that there is room for limited war even between two nuclear weapons states but it also showed the limit of how far such a conventional war could proceed between established nuclear powers. The deterrence ability of nuclear weapons are never in question. Hence for Israel it would have further raised the now or never question for dealing with the nuclear ambitions of its adversary.

It is possible that Iran really does not have any nuclear weapon and has not enriched any fissile material to weapons grade and was merely using its fissile stockpile as a bargaining chip to lift western sanctions. At the same time and a more likely scenario is that perhaps Iran wanted to eat its cake and have it too. It wanted to be an ambiguous nuclear weapons power like Israel while being fully integrated in the world economy rather than be an overt nuclear pariah state like North Korea. The prospect of Saudi Arabia, Israel and perhaps even Turkey becoming overt nuclear weapons state as a response to Iranian nuclear weapons testing and strong opposition by the partners of Iran namely Russia and China to such a scenario in West Asia  perhaps made the choice of overt nuclear testing a difficult one for Iran.

The 2003 Fatwa placed against nuclear weapons by Ayatollah Khamenei which was issued soon after the US invasion of Iraq made it impossible for Iran to openly test a nuclear device, however the west continued to suspect that a clandestine Iranian nuclear weapons program was well in progress. This lead to the enhanced US economic sanctions on Iran the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA), signed by President Obama on July 1, 2010. These Obama era sanctions and India's nuclear deal with USA made it difficult even for India to continue its purchase of Iranian oil and India progressively stopped oil imports from Iran. This was perhaps the first such occasion in recent memory when US was so brazenly able to inject itself into India's foreign policy though its domestic laws and enforce compliance by India in its sanctions regime against Iran which until then was its second largest oil export destination.

The economic sanctions on Iran had its effect and it resulted in US lead nuclear deal between the P5+1 and Iran called JCPOA in 2015. Iran agreed to reduce uranium enrichment to approx. 3% and to IAEA monitoring of its nuclear sites. Thus allowing Iran to regain access to international markets and financial system. However the Trump administration in 2018 unilaterally withdrew from the deal and reimposed sanctions on Iran. India also once again left Iran in lurch by complying with the US  unilateral sanction on Iran and stopped purchase of Iranian oil in 2019. As a side effect to this Iran-US tussle, it was revealed for everyone to see, that India's foreign and trade policy was now increasingly being determined by the US domestic law and US interests, and not by India's national interests. Its much touted strategic autonomy was progressively under stress.

With this latest war imposed on Iran by Israel and USA, India's position in West Asia and Indian ocean region has been much weakened. Not only are its millions of nationals in the gulf states in the firing line as civilian casualties of its war, its energy security and fertilizer imports are at risk due to the Gulf region being the primary source of these commodities. Already LPG supplies in India are under stress. The sinking of Iranian Naval ship which had been participating in naval exercises in India and had participated in the International Fleet review in February, so close to Indian waters just off the coast of Sri Lanka has caused embarrassment to India. GOI has tried to play down this incident but this brazen action by US Navy has dented Indian Navy's often touted claim of being the net security provider in the Indian Ocean Region. PM Modi's state visit to Israel and acceptance of Knesset Speaker's medal just on the eve of this War, has been bad optics for India. The delayed and muted reaction to this war by India is also noticeable. India, by not condemning this war, stood out from its BRICS partners Russia, China and Brazil.  

The cost of this war is not limited to West Asia alone but has global ramifications. Gulf being the energy center of the world and a region with overwhelming number of immigrant population, any instability in this region directly or indirectly affects every household in the the world. Given such a large impact of this war, it is essential that the west should have had very well thought out reason for engaging in this war. Regime change was not a likely outcome of this war without out right invasion which was unlikely from the outset. The prospect of another mowing the grass war every few months or years will plunge West Asia into another crisis and the world economy will continue to remain hostage to instability in the Gulf. India will have to find its feet and break from Israel and USA on this issue and stand with those bystander countries whose economies are being damaged by this war, to ensure that this war now comes to an end and a repeat war of this nature is not imposed by Israel and US again. 

The risk of Iran now overtly becoming a nuclear weapons power by testing a device and causing a ripple effect in the region with Saudi Arabia, Israel and Turkey following suite also exists. Iran has every incentive to test a nuclear device now, if it still has the capability left. In such a scenario it would become necessary for India to resume open ended nuclear testing and develop a robust thermonuclear arsenal (as has been advocated in past by Bharat Karnad, K Santhanam, P K Iyengar and Ashok Parthasarathi) and much longer range delivery systems to secure itself in a changing world order.