Shanti Act 2025 Archives

Intorduction

The newly enacted Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Act, 2025 (“SHANTI Act” or “Act”) has repealed and replaced the Atomic Energy Act, 1962 and the Civil Liability for Nuclear Damage Act, 2010 (“Existing Laws”), and has introduced a consolidated legal framework governing the promotion, development and regulation of nuclear energy. The Act seeks to remove barriers which have held back growth in India’s nuclear power generation. The Act seeks to attract domestic and foreign investment; promote R&D and innovation with a proportionate allocation of risk to global suppliers of nuclear equipment and fuel; within an institutional framework which safeguards Indian citizens, secures safety systems, and provides effective enforcement through the specialized mechanism.

The Act removes ambiguities that existed in the past laws regarding potential multifarious jurisdiction over claims and liability regime, now according statutory recognition to Atomic Energy Regulatory Board (“Board”), with nuclear damage claims adjudication vested with the Claims Commissioner and the Nuclear Damages Claims Commission, whose appeals shall lie before the Appellate Tribunal for Electricity. It excludes jurisdiction of civil courts over such matters and gives an overriding effect to the Act over all other laws and instruments.

Interestingly, the ambit of SHANTI Act extends beyond power generation to include the application of nuclear technology in healthcare, food, water and agriculture, with the objective of providing a clearer and more predictable regulatory environment. The Act permits foreign direct investment of up to 49% (Forty Nine Percent) in specified nuclear activities under the automatic route, thereby unshackling the public sector monopoly over this domain.

To achieve India’s target of 100 gigawatts of nuclear power capacity by 2047, the SHANTI Act allows eligible private companies and incorporated joint ventures to apply for licences to construct, own, operate and decommission nuclear power plants and reactors. At the same time, it preserves sovereign control over strategic and safety-sensitive activities, including uranium enrichment, spent fuel management, heavy water production, radioactive substances and radiation-generating equipment.

The key differences between the Existing Laws and the SHANTI Act are outlined below.

KEY DIFFERENCES AT A GLANCE

Entry into the Nuclear Sector

Under the Existing Laws, nuclear power generation was effectively restricted to the Union Government and government-controlled entities.

In contrast, Section 3 of the SHANTI Act introduces a comprehensive licensing regime for nuclear facilities and activities. It expressly permits a wide category of persons including Government departments and institutions, government companies, any other company, a joint venture among any of the aforesaid, and any other person specifically permitted by the Union Government by notification, to apply for licenses to build, own, operate or decommission nuclear power plants or reactors and to undertake related activities such as the fabrication of nuclear fuel (comprising conversion, refining and limited enrichment of uranium-235 upto threshold value notified by the Union Government), transportation and storage of nuclear fuel or spent fuel, and the import and export of nuclear fuel or spent fuel, prescribed equipment, and nuclear-related technology or software. Where licensed activities involve potential radiation exposure, a separate safety authorisation is also required.

Companies outside India not allowed

Private companies incorporated outside India are not permitted to operate under the SHANTI Act. Section 2(9) of the SHANTI Act defines “company” by reference to Section 2(20) of the Companies Act, 2013, and expressly excludes companies incorporated outside India. It would appear that foreign investors will have to route their investments through a company incorporated under Indian laws.

Sovereign control over critical nuclear materials

Section 3, most importantly, draws a clear line around strategic nuclear functions, reserving certain activities exclusively for the Union Government or its wholly owned entities. These include uranium enrichment or isotopic separation, spent fuel management including reprocessing and waste handling, and the production and upgrading of heavy water, unless specifically notified otherwise. However, it permits licensed private entities to engage in the fabrication of nuclear fuel, including conversion, refining and enrichment of uranium-235, but only up to a threshold value notified by the Union Government.

Further, while licensed private entities are permitted extensive operational activities in relation to nuclear facilities under Section 3, the provision also ensures continued governmental supervision and control over nuclear materials and safety-critical aspects. Source material and fissile material, whether produced domestically or imported, remain under the surveillance and accounting control of the Union Government; spent fuel is required to be safely stored for the prescribed cooling period before being delivered to Union Government for its subsequent management; and heavy water used in nuclear facilities is required to remain under the supervision of Union Government for purposes of accounting, and must be returned to the Union Government after the intended use.

Section 5 complements this framework by retaining sovereign ownership and control over uranium and thorium at the upstream stage. It mandates that the exploration, mining and decommissioning of mines containing uranium and thorium may be carried out only by the Union Government or its controlled entities, and that all uranium and thorium mined or extracted vest in the Union Government and cannot be sold, transferred or otherwise disposed of without prior approval.

Read together, Sections 3 and 5 reflect a calibrated allocation of rights and responsibilities under the SHANTI Act, designed to facilitate participation while maintaining robust oversight and safeguards.

Exemption for Research and Innovation

Under the Atomic Energy Act 1962, Section 14 required licensing for all activities involving prescribed substances and plants, with no exemption for research activities.

Section 9 of the SHANTI Act allows persons to carry out research, development, design and innovation in matters related to nuclear energy and radiation for peaceful use without a licence, except for activities exclusively reserved for Union Government or having national security implications, provided adequate safety and security is ensured. The relaxation of licensing requirements for non-strategic research is expected to spur greater investment in nuclear R&D by universities, research institutions and private enterprises.

Liability of the Operator

Section 6 of the Civil Liability for Nuclear Damage Act, 2010 sets out a two-tier liability framework. Firstly, it caps the maximum liability for each nuclear incident at the rupee equivalent of 300 million Special Drawing Rights (“SDRs”), with the Union Government empowered to take additional measures where the compensation payable exceeds this amount. Secondly, it fixes operator-specific liability limits directly in the statute, based on broad categories of installations: INR 500 crore for nuclear reactors having a thermal power of 10 (Ten) megawatts or above, INR 300 crore for spent fuel reprocessing plants, and INR 100 crore for research reactors below 10 (Ten) megawatts, other fuel cycle facilities and the transportation of nuclear materials.

Even though Section 13 of the SHANTI Act retains the same overall incident cap of 300 million SDRs, however, it restructures the manner in which the operator liability limits are determined. The Second Schedule of the SHANTI Act sets out differentiated operator liability amounts linked to the thermal capacity of nuclear installations, ranging from INR 100 crore for smaller reactors, certain fuel cycle facilities and transportation activities to INR 3000 crore for large reactors above 3,600 (Three Thousand Six Hundred) megawatts to INR 100 crore. This approach enables a closer alignment between operator liability exposure and the scale and risk profile of the installation.

It is to be noted that SDR are an international reserve asset created by the International Monetary Fund, the value of which is determined and allocated by it to its member countries.

Under the SHANTI Act, the operator shall not be liable in case of nuclear damage caused by nuclear incident due to a grave natural disaster of an exceptional character or an act of armed conflict, hostility, civil war, insurrection or terrorism. The operator will not be liable for damages in “under construction nuclear installation itself and any other nuclear installation including a nuclear installation under construction, on the site where such installation is located, any property on the same site which is used or to be used in connection with any such installation; or the means of transport upon which the nuclear material involved was carried at the time of nuclear incident.”

Liability of the Supplier

Under Section 17 of the Civil Liability for Nuclear Damage Act, 2010, the operator was granted a broad statutory right of recourse, including against suppliers where a nuclear incident resulted from defective equipment, materials or sub-standard services. This statutory right operated independently of contractual arrangements, meaning that supplier liability could arise even in the absence of an express contractual provision, and potentially extend beyond the commercial risk allocation agreed between the parties.

Section 16 of the SHANTI Act addresses concerns relating to ambiguity by restricting the operator’s right of recourse to 2 (Two) limited circumstances: (a) in cases where it is expressly provided for in a written contract, or (b) where the nuclear incident results from an individual’s intentional act to cause nuclear damage. In practical terms, this shifts supplier liability back into the contractual domain, where risk is typically managed through negotiated provisions such as liquidated damages clause under which liability for defects or delays is capped at a specified percentage of the contract value, as also nuclear liability insurance. By aligning statutory recourse with contractual risk allocation, the SHANTI Act is set to bring greater predictability to supplier exposure and align India’s nuclear liability framework with international best practice.

Liability under Nuclear Liability Fund

Under Section 7 of the Civil Liability for Nuclear Damage Act, 2010, the Union Government was required to establish a Nuclear Liability Fund for the purpose of meeting a part of its liability in specified circumstances, including to cover situations where the liability for nuclear damage exceeded the operator’s liability cap under the said act, or where such liability arose due to events referred to in Section 5(1)(i) and (ii) of the said Act, including grave natural disasters, armed conflict, hostilities or similar extraordinary events. Such Nuclear Liability Fund was earlier established by charging such amount of levy from the operators.

Section 14 of the SHANTI Act, 2025 places the residual liability beyond the Second Schedule on the Union Government, thereby limiting the scope of exposure for operators.

Patents for nuclear and radiation technologies

Under Section 20 of the Atomic Energy Act, 1962, patents were prohibited for all inventions relating to atomic energy, with mandatory disclosure to the Union Government, restrictions on filing patent applications outside India, and government ownership of inventions developed in government establishments or under government contracts.

In contrast, Section 38 of the SHANTI Act permits the grant of patents for inventions relating to the peaceful uses of nuclear energy and radiation, while continuing to bar patents for inventions linked to activities reserved for the Union Government or those involving national security or sensitive concerns.

Statutory Status of Atomic Energy Regulatory Board

The Atomic Energy Regulatory Board, which previously functioned under Section 27 of the Atomic Energy Act, 1962, will continue under the SHANTI Act, 2025.

Under Section 17 of the Act, the Board is accorded statutory recognition, as it is deemed to be constituted under the SHANTI Act rather than merely by an executive action of the Union Government.

Penalties

Under the Atomic Energy Act, 1962 and the Civil Liability for Nuclear Damage Act, 2010, penalties were imposed directly for contraventions or non-compliance, without a structured statutory investigation framework.

In contrast, the SHANTI Act introduces a preliminary investigation mechanism under Section 29, enabling the Union Government or the Board to investigate complaints, nuclear or radiological events, reviews of statutory returns, or findings arising from inspections conducted under Section 28, before any enforcement action is taken.

Further, while Section 39 of the Civil Liability for Nuclear Damage Act, 2010 provided for imprisonment and/or fines for violations; Section 70 of the SHANTI Act replaces this with a graded monetary penalty regime. Violations under the Act are categorised as severe, major, moderate or minor, with penalties calibrated accordingly and the maximum penalty extending up to INR 1 crore for severe breaches.

Dispute Resolution

Under the Existing Laws, there was no structurally tiered statutory dispute resolution mechanism. Disputes were largely addressed through contractual arrangements, including arbitration, with recourse to courts in accordance with general law.

In contrast, the SHANTI Act introduces a dedicated regulatory and dispute resolution mechanism. Under the SHANTI Act, orders and directions issued by the Board may first be subject to review by the Board, in accordance with the prescribed procedure. Further, licensees or holders of safety authorisation who are aggrieved by any order or decision of the Union Government or the Board may seek redressal before the Atomic Energy Redressal Advisory Council, established under Section 47 of the SHANTI Act.

The appellate structure is further strengthened under Section 51 of the SHANTI Act, which designates the Appellate Tribunal for Electricity, established under Section 110 of the Electricity Act, 2003, as the appellate authority against orders of the Council. Decisions of the Appellate Tribunal for Electricity may thereafter be challenged before the Supreme Court of India, thereby creating a clear, multi-tier statutory dispute resolution framework within the nuclear regulatory regime.

CONCLUSION

The SHANTI Act, 2025 represents a decisive shift in India’s nuclear regulatory framework enabling regulated private sector participation while retaining sovereign control over strategic and safety-sensitive activities. It provides a clearer licensing and liability regime, refined operator and supplier liability structures, statutory recognition of the Atomic Energy Regulatory Board, and a graded enforcement and dispute resolution framework, to address long-standing legal and commercial concerns that have limited private and foreign investment in the sector. The Act adopts a risk-based regulatory approach, allowing the Union Government to grant licensing exemptions for low-risk activities where the associated risk is insignificant, while retaining broad powers to grant, suspend or revoke licences and to assume control in national emergencies.

Its focus on research development and innovation with a much clearer and stronger regulatory regime augurs well for the future of Indian nuclear power programme. It should be a welcome framework for serious and credible investors and suppliers, while keeping opportunistic players out.

The co-authors are: