In News:

The SHANTI Act, recently passed by Parliament, marks a major structural shift in India’s nuclear energy governance. By opening the sector to private players and overhauling the nuclear liability regime, it seeks to revive nuclear expansion while aligning India’s framework with global norms. However, it has simultaneously triggered debate on safety, accountability, and risk distribution.

Background: India’s Nuclear Liability Framework

India’s nuclear liability architecture was governed by the Civil Liability for Nuclear Damage Act (CLNDA), 2010, enacted after India joined the Convention on Supplementary Compensation for Nuclear Damage (CSC). The law aimed to ensure prompt compensation in the event of a nuclear accident while maintaining accountability.

A distinctive feature of the CLNDA was the “right of recourse,” allowing the operator to seek compensation from suppliers if an accident resulted from defective equipment or services. Section 46 further allowed victims to pursue remedies under other laws, including criminal law. While this strengthened victim protection, international suppliers argued that it created unlimited liability exposure, discouraging investment.

Despite ambitious targets—10 GW by 2000 and 20 GW by 2020—actual nuclear capacity reached only 2.86 GW in 2000 and 6.78 GW in 2020. Nuclear power currently contributes around 3% of India’s electricity generation. High capital costs, liability uncertainties, and safety concerns have constrained growth.

Key Features of the SHANTI Act

1. Opening the Sector to Private Participation: The Act permits private entities to operate nuclear power plants, ending the Union government’s exclusive control under the Atomic Energy framework. This represents a paradigm shift in India’s state-led nuclear model.

2. Removal of Supplier Liability: The Act eliminates the operator’s right of recourse against suppliers, effectively indemnifying them. Liability is channelled exclusively to the operator, in line with international practice. Clause 46 of the CLNDA is omitted, restricting victims’ ability to seek additional remedies under other laws.

3. Liability Caps: Operator liability is capped between ?100 crore (small plants) and ?3,000 crore (large plants). Total liability, including the Centre’s contribution, is limited to 300 million Special Drawing Rights (approximately ?3,900 crore).

4. Regulatory Framework: The Act provides statutory backing to the Atomic Energy Regulatory Board (AERB), though concerns remain about its independence since appointments are linked to the Atomic Energy Commission.

Concerns and Critiques

Historical nuclear disasters such as Three Mile Island accident, Chernobyl disaster, and Fukushima Daiichi nuclear disaster revealed vulnerabilities linked to design flaws, emergency failures, and communication lapses. The economic costs were staggering—Fukushima alone is estimated at nearly ?46 lakh crore, while Belarus assessed Chernobyl-related losses at around ?21 lakh crore. In comparison, India’s liability cap of ?3,900 crore is negligible.

Critics argue that such caps create moral hazard by insulating operators and suppliers from the full financial consequences of accidents. The Act also indemnifies operators for accidents caused by “grave natural disasters,” diluting India’s earlier principle of absolute liability for hazardous industries. Given that Fukushima was triggered by a tsunami, treating natural disasters as unforeseeable risks is contentious.

Economic and Strategic Dimensions

Globally, nuclear projects involve massive capital costs. Two Westinghouse AP1000 reactors in the U.S. reportedly cost about $18 billion each. India aims to scale nuclear capacity to 100 GW by 2047, with private and foreign participation expected to accelerate investment. However, emerging technologies such as small modular reactors remain largely untested and potentially cost-intensive.

Conclusion

The SHANTI Act seeks to unlock private investment and integrate India into global nuclear supply chains. While it addresses industry concerns and aligns liability norms internationally, it also redistributes risk toward operators and potentially victims. Balancing energy security, regulatory independence, financial prudence, and public safety will determine whether the reform strengthens India’s nuclear future or exposes it to long-term vulnerabilities.