What Happened
- The Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act received Presidential assent on December 20, 2025, replacing both the Atomic Energy Act of 1962 and the Civil Liability for Nuclear Damage Act (CLNDA) of 2010 with a single legislation.
- The new Act removes the operator's right of recourse against suppliers under Section 17(b) of the CLNDA, which previously allowed recourse when a nuclear incident resulted from supply of equipment with patent or latent defects.
- The operator's maximum liability has been increased from Rs 1,500 crore (under CLNDA) to Rs 3,000 crore for reactors with thermal power above 3,600 MW, capped at 300 million Special Drawing Rights (SDRs).
- Critics argue that capping liability creates moral hazard by reducing incentives for suppliers to maintain rigorous safety standards.
- India's nuclear energy contributes only about 3% of total electricity generation despite decades of ambitious targets, raising questions about whether liability reform alone can drive capacity expansion.
Static Topic Bridges
Civil Liability for Nuclear Damage Act (CLNDA), 2010
- Section 6 fixed the operator's liability at Rs 1,500 crore (approximately SDR 300 million at the time).
- Section 17 granted the operator a right of recourse against suppliers under three conditions: (a) if expressly provided in a written contract, (b) if the incident resulted from supply of defective equipment or sub-standard services, and (c) if an individual acted with intent to cause damage.
- Section 17(b) was unique globally -- most nuclear liability conventions (Paris Convention, Vienna Convention, CSC) place liability solely on the operator with no recourse against suppliers.
- The right of recourse was limited to the duration of the initial license or the product liability period, whichever was longer (typically 5-7 years).
Connection to this news: The SHANTI Act removes Section 17(b), eliminating the statutory basis for operator recourse against suppliers for defective equipment. While the Act permits contractual right of recourse, critics argue that without a statutory mandate, foreign suppliers hold disproportionate bargaining power to exclude such clauses, effectively indemnifying themselves.
India's Three-Stage Nuclear Power Programme
- Stage 1: Pressurised Heavy Water Reactors (PHWRs) using natural uranium -- currently operational with 24 reactors producing approximately 8,800 MWe.
- Stage 2: Fast Breeder Reactors using plutonium from Stage 1 -- the 500 MWe Prototype Fast Breeder Reactor at Kalpakkam, originally expected by 2010, began core loading in 2024.
- Stage 3: Thorium-based reactors -- India holds about 25% of global thorium reserves but this stage remains largely experimental.
- In 1972, the Department of Atomic Energy projected 43,000 MW of nuclear capacity by 2000; actual capacity that year was only 2,720 MW (barely 6% of the target).
- Current installed capacity is approximately 8,800 MW against a target of 22,480 MW by 2031-32.
Connection to this news: The SHANTI Act aims to unlock nuclear capacity expansion by making India's liability regime more attractive to foreign suppliers like Westinghouse and EDF. However, critics point out that past capacity shortfalls stem from technology delays, land acquisition issues, and public opposition -- not just liability concerns.
Moral Hazard in Liability Frameworks
- The Bhopal Gas Tragedy (1984) is frequently cited as a cautionary example where limited corporate liability resulted in inadequate safety investments at the Union Carbide plant.
- The Fukushima disaster (2011) demonstrated how equipment failures (backup diesel generators, containment systems) can amplify nuclear accidents, underscoring the importance of supplier accountability.
- International frameworks like the Paris Convention and Vienna Convention channel all liability to the operator, but these conventions operate in countries with robust domestic regulatory oversight and supplier accountability through separate mechanisms.
- The Nuclear Damage Claims Commission established under CLNDA adjudicates compensation claims but has never been operationally tested.
Connection to this news: The removal of statutory supplier recourse under the SHANTI Act raises moral hazard concerns -- if suppliers cannot be held liable for defective equipment, their incentive to maintain the highest manufacturing standards may diminish, especially for components with long operational lifetimes (40-60 years for a reactor).
Key Facts & Data
- Nuclear power contribution to India's electricity: approximately 3% (56.7 TWh in FY 2024-25)
- Number of operational nuclear reactors in India: 24, across 7 sites in 6 states
- Reactors under construction: 11 with combined capacity of 8,700 MW
- SHANTI Act operator liability cap: Rs 3,000 crore (300 million SDRs) for large reactors
- Previous CLNDA liability cap: Rs 1,500 crore
- Government target: 22,480 MW nuclear capacity by 2031-32; 100 GW by 2047
- Nuclear Energy Mission for Viksit Bharat (announced February 2025): at least 5 small modular reactors by 2033