India has embarked on a transformative journey to harness nuclear energy for its development and climate goals with the passage of a landmark new law. The Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act, enacted in late 2025, represents the most significant overhaul of the country's atomic energy framework in over six decades.
Ending a State Monopoly and Addressing Liability Hurdles
The SHANTI Act, described as bold and substantive legislation, dismantles the state monopoly held since the Atomic Energy Act of 1962. It establishes a clear, license-based pathway for private sector investment into nuclear power generation. Furthermore, it grants the Atomic Energy Regulatory Board (AERB) a solid, independent statutory foundation to act as the sector's regulator.
A critical achievement of the Act is its restructuring of the contentious civil nuclear liability regime. The previous Civil Liability for Nuclear Damage Act of 2010, influenced by the Bhopal tragedy, had become a major barrier for foreign equipment suppliers. Its Section 17(b), which allowed plant operators to seek recourse from suppliers for defective parts, deviated from international norms under the Convention on Supplementary Compensation.
The new law aligns India with global standards. Now, operator recourse against suppliers is permitted only if explicitly stated in a contract, or if a nuclear incident results from an intentional act to cause damage. This change is expected to unblock long-stalled projects with foreign collaboration, such as those proposed at Kovvada and Jaitapur.
Areas Needing Clarity for Investor Confidence
While the legislative framework is robust, analysts point out that crucial details are left to future rules and regulations. The success of the reform hinges on how these are framed to provide predictability for long-term, capital-intensive investments.
First, the Act leaves key terms like "sensitive" activities, matters with "national security implications", and "strategic nature" undefined. Without clarity, startups working on innovations like small modular reactors (SMRs) may fear their intellectual property could be appropriated by the government, chilling vital R&D investment.
Second, Section 25 allows for creating additional regulatory bodies for "strategic" activities, creating potential uncertainty about which regulator a facility might answer to. Third, the process for selecting AERB members, currently overseen by a committee under the Department of Atomic Energy, could be strengthened with more independent experts to bolster the regulator's perceived autonomy.
The Pricing Conundrum and Path to Commercial Success
Perhaps the most debated provision is Section 37, which vests the authority to set tariffs for nuclear electricity solely with the central government, overriding the Electricity Act, 2003. Critics argue this creates an avoidable problem, as electricity from any source is fundamentally the same product.
The rationale for government-controlled pricing likely stems from nuclear power's high generation cost. However, this is precisely why mandated procurement by financially strained state distribution companies (discoms) is seen as unsustainable. Instead, experts suggest the future lies in matching producers with the right buyers.
Power-hungry entities like data centres, industrial clusters, Special Economic Zones (SEZs), and commercial consumers seeking reliable, clean baseload power are natural customers. They may pay a premium for round-the-clock, non-fossil generation. Promoting captive nuclear power plants and adopting models similar to offshore wind—where generators secure their own commercial and industrial customers—could provide a viable path forward.
For purely private transactions, there is little policy rationale for central price intervention. Long-term stability will come from commercial agreements between willing parties, not from a top-down administered tariff system that insulates generators from market signals.
India has taken a decisive legislative step. The hard work now shifts to the next phase: crafting precise rules, ensuring regulatory independence, and designing a tariff policy that enables nuclear energy to find its competitive place in India's diverse energy market.
