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.