SHANTI ACT, 2025: Key Reforms And Liability Framework

The Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India ("SHANTI") Act, 2025 ("the SHANTI ACT") repeals the Atomic Energy Act, 1962 ("AEA") and the Civil Liability for Nuclear Damage Act, 2010 ("CLND") and introduces a consolidated legal framework governing the promotion, regulation, and development of nuclear energy in India.

Key Changes Introduced by the SHANTI ACT, 2025

1. Shift from state monopoly to regulated private participation: The SHANTI Act expands the scope of eligible participants by allowing private companies and joint ventures, in addition to government entities, to apply for licences for civil nuclear projects. However, it is pertinent to note that private companies incorporated outside India are not allowed to operate under the Act. SHANTI Act defines "company" by reference to Section 2(20) of the Companies Act, 2013, expressly excluding foreign incorporated entities. Consequently, any foreign investment is required to be channelled through companies incorporated under Indian law, thereby ensuring that operational control continues to remain with domestically incorporated entities in line with the regulatory framework.
2. Research and Innovation: 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 the Union Government or having national security implications, provided adequate safety and security is ensured. However, AEA, required licensing for all activities involving prescribed substances and plants, with no exemption for research activities.
3. Intellectual Property Rights: Under the SHANTI ACT, the Central Government is empowered to grant patents for inventions relating to the peaceful use of nuclear energy and radiation. This marks a significant shift from the AEA, which expressly prohibited the grant of such patents.

LIABILITY UNDER THE SHANTI ACT

The SHANTI ACT is based on the principle of strict liability, meaning that the operator of a nuclear installation is liable for damage regardless of fault. An operator is defined as the person who has been granted a licence to operate a nuclear installation.

Scope of Operator Liability

Recourse to Suppliers: Under the CLND Act, an 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. However, under the SHANTI ACT, the operator's right of recourse against suppliers is now limited to only two situations where: (a) the right of recourse is expressly provided in a written contract; or (b) the nuclear incident results from an act or omission done with the specific intent to cause nuclear damage.

Exceptions to Operator Liability: An operator shall not be liable in case of nuclear damage caused by a nuclear incident due to a grave natural disaster of an exceptional character or an act of armed conflict, hostility, civil war, insurrection or terrorism. Further, an operator shall not be liable for any nuclear damage caused to (i) the nuclear installation itself and any other nuclear installation including a nuclear installation under construction, on the site where such installation is located; (ii) any property on the same site which is used or to be used in connection with any such installation; or (iii) the means of transport upon which the nuclear material involved was carried at the time of nuclear incident

Furthermore, where any nuclear damage is suffered by a person on account of his own negligence or from his own acts of commission or omission, an operator shall not be liable to such person.

Graded Liability Structure: Formerly, Section 6 of the CLND Act imposed a flat liability cap of INR 1,500 crore. However, the SHANTI ACT has introduced a graded liability limit based on the size and thermal capacity of the nuclear installation:

Further, the maximum liability per nuclear incident is capped at 300 million Special Drawing Rights (SDRs). SDRs are international reserve assets created by the International Monetary Fund ("IMF"), the value of which is determined and allocatedby the IMF to its member countries.

INSURANCE AND FINANCIAL SECURITY

The operator is required to obtain an insurance policy or other financial security covering the specified liability before starting operation of nuclear installation to ensure that operators are able to meet their liability obligations. The operator must also renew the insurance policy or other financial security regularly. However, nuclear installations owned by the Central Government are exempt from this requirement.

CONCLUSION

The SHANTI Act, 2025 marks a decisive turning point in India's energy trajectory, transitioning from a rigid state monopoly to a dynamic, multi-stakeholder ecosystem. By modernizing intellectual property rights, deregulating peaceful research, and establishing a sophisticated liability framework, the Act successfully reconciles the agility of the private sector with the non-negotiable requirement for stringent sovereign oversight. This legislative overhaul does more than just update regulations; it provides the institutional foundation for nuclear energy to serve as the reliable, clean, and "round-the-clock" backbone of a technologically advanced India.

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