SHANTI Act, 2025: Nuclear Power Projects - Relevance for Private Stakeholders
The Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Act, 2025 ("SHANTI Act") has been enacted by the Parliament of India in order to, amongst other things, promote and develop nuclear energy and ionising radiation for nuclear power generation. The SHANTI Act will repeal and replace the Atomic Energy Act, 1962 ("Atomic Energy Act") and the Civil Liability for Nuclear Damage Act, 2010 ("CLND Act"). At present, i.e. till the SHANTI Act is brought into force, private sector participation in generation of power using nuclear energy is restricted and the foreign direct investment (FDI) is prohibited.
In this overview, we focus on the provisions of the SHANTI Act which are relevant for the private stakeholders with respect to nuclear power projects. This update covers the following aspects with respect to nuclear power projects:
Who can develop a nuclear power plant in India?
- Duties and obligations of private stakeholders
- Liability of the private stakeholders
- Tariff, Dispute Resolution and Penalty
- Right of the Central Government to takeover
- Conclusion
Who can develop a nuclear power plant in India
The previous attempt of the Government for opening up the nuclear energy sector for civil use was in 2009-2010 under the Manmohan Singh Government. At such time, and as is presently, under the Atomic Energy Act, only a Government Company (i.e. where the Central Government holds a minimum of 51%) could set up a nuclear power plant. A broad interpretation of this suggested that private participation up to 49% could be undertaken in the development of a nuclear power plant. However, statements of the Government indicated that amendments to the Atomic Energy Act is required to allow private participation1. With respect to foreign direct investment (FDI), at that time the Government spoke about investment up to 26% initially and such FDI may then be increased up to a maximum of 49% once a robust regulatory mechanism was in place. However, these amendments were not undertaken by the Central Government though the CLND Act was enacted in 2010 and brought into force in 2011.
The two main legislations, i.e. the Atomic Energy Act and the CLND Act, will now be repealed and replaced by the SHANTI Act which opens up the nuclear power generation sector for private participation. The following persons can set up a nuclear power plant by obtaining a licence from the Central Government (Sec. 3):
(a) the Central Government,
(b) Government Companies,
(c) any other company incorporated under the Companies Act 2013,
(d) Joint ventures of any of the above, and
(e) Any other person notified by the Central Government.
It may be noted here that there is no reference to a foreign stakeholder being eligible for setting up a nuclear power plant. This also becomes clear from the fact that the definition of company under the SHANTI Act clearly excludes a company incorporated outside India.
The SHANTI Act also does not provide for participation by foreign stakeholders through FDI. At present, Indian laws expressly prohibit FDI2 in atomic energy3. As on date there is no change in the same and the Department of Atomic Energy has clarified the same in the Parliament on December 10, 2025.4
In addition to seeking licence in relation to a nuclear power plant, private stakeholders can participate in the following activities associated with nuclear power plant, after obtaining a licence from the Central Government:
(a) build, own, operate or decommission a nuclear power plant or reactor;
(b) the fabrication of nuclear fuel including conversion, refining and enrichment of uranium-235 up to such threshold value, or production, use, processing or disposal of other prescribed substance, as may be notified by the Central Government;
(c) the transportation or storage of nuclear fuel or spent fuel or any other prescribed substance;
(d) the import, export, acquisition, or possession of nuclear fuel or prescribed substance;
(e) the import, export, acquisition or use of prescribed equipment;
(f) the import or export of any technology or software, that may be used for the development, production or use of prescribed substance or prescribed equipment; or
(g) any other facilities or activities as may be notified by the Central Government.
However, private participation is prohibited in the following activities and they can only be performed by the Central Government:
(a) the enrichment or isotopic separation of prescribed substance or radioactive substance, unless otherwise notified by the Central Government in this behalf;
(b) the management of spent fuel, including reprocessing, recycling, separation of radionuclides contained therein and management of high-level radioactive waste arising thereof;
(c) the production of heavy water and its upgradation by isotopic separation; or
(d) any other facilities or activities as may be notified by the Central Government
Duties and obligations of private stakeholders
Chapter III (Section 10 to Section 16) of the SHANTI Act establishes a comprehensive framework governing the duties and obligations of the person holding a licence(s) and, or, safety authorisation(s) under Section 3. This also, therefore, applies to the developers of nuclear facility which includes a nuclear power plant.
Duties
Given the nature of the fuel to be used in a nuclear power plant, the SHANTI Act provides for certain duties which are to be undertaken by the developer of a nuclear power plant. These duties are provided at Section 10 of the SHANTI Act and are summarised as follows:
(a) Licensees or safety authorisation holders must not undertake any activity other than the purpose for which the authorisation was granted.
(b) Licensees or safety authorisation holders must handle prescribed substances, radioactive substances, and operate prescribed equipment or radiation generating equipment in accordance with the terms and conditions of the licence or safety authorisation and subject to safeguards provided in the purchase agreement.
(c) Employer of a facility, occupier of a factory, owner of a mine, or any other person in possession of radioactive substance or radiation generating equipment bears prime responsibility for safety, security and safeguards.
(d) Such persons as mentioned in above clause (c) must comply with terms and conditions as may be prescribed by the Central Government.
Obligations
SHANTI Act prescribes the following obligations to be complied with by the developers:
(a) Regulatory Compliance: comply with terms and conditions of the licence and safety authorisation, rules, regulations, orders and regulatory documents regarding safety, security, safeguards, quality assurance and control, radioactive waste management, decommissioning of facilities, and maintaining design support throughout the facility's lifetime.
(b) Record-Keeping: maintain books of account and other documents or records as required by the Central Government or the Board.
(c) Reporting: furnish periodic returns and reports to the Central Government or the Board as required.
(d) Inspection Access: provide access and necessary infrastructure to authorised representatives of the Central Government and the Board, including their resident officers and employees at the site, for conducting inspections and investigations.
(e) Financial Security: maintain sufficient financial security in the manner prescribed.
(f) Safe Disposal and Decommissioning: ensure safe disposal of radioactive substances and decommissioning of the facility or mine, and settle claims for compensation arising from injury, loss or damage (other than nuclear damage) caused by radiation or radioactive contamination.
Liability of the private stakeholder
As per Section 2 of the SHANTI Act, an "operator", with respect to a nuclear installation, is the person who has been granted a licence for the purpose of operating the nuclear installation5, which in case of a private sector participant will be the company of a joint venture company as mentioned above.
The SHANTI Act provides for the person who will be held liable for a nuclear damage depending on the event as specified therein as follows:
| Cause of Nuclear Damage | Person Responsible |
| Nuclear damage caused by a nuclear incident occurring in that nuclear installation* | The operator |
Nuclear damage involving nuclear material transported from that nuclear installation and occurring before*:
| The operator (of the originating installation) |
Nuclear damage involving nuclear material transported to that nuclear installation and occurring after:
| The operator (of the receiving installation) |
| Nuclear damage caused by a nuclear incident occurring in a nuclear installation on account of temporary storage of material-in-transit in such installation | The person responsible for transit of such material (deemed to be the operator) |
| Nuclear damage caused as a result of nuclear incident during the transportation of nuclear material | The consignor (deemed to be the operator) |
Where any written agreement has been entered into between:
| The person liable for any nuclear damage under such agreement (deemed to be the operator) |
*Where multiple operators are involved, their liability shall be joint and several, though the total liability shall not exceed the extent specified in the Second Schedule.
The SHANTI Act further provides that where both nuclear damage and damage other than nuclear damage have been caused by a nuclear incident or, jointly by a nuclear incident and one or more other occurrences, then such other damage shall, to the extent it is not separable from the nuclear damage, be deemed to be a nuclear damage caused by such nuclear incident thereby making the operator or such person, as listed in the table above, responsible and liable.
Exemptions where an operator shall not be liable are as follows:
(a) Grave natural disaster of an exceptional character;
(b) Acts of armed conflict, hostility, civil war, insurrection or terrorism;
(c) Damage to the nuclear installation itself, other nuclear installations on the same site, property used in connection with such installations, or means of transport carrying nuclear material at the time of the incident; and
(d) Where damage is suffered by a person due to their own negligence or acts of commission or omission.
Limitation of Liability
Irrespective of the type and extent of damage, the SHANTI Act provides for the limitation of liability as follows:
(a) maximum amount of liability in respect of each nuclear incident shall be the rupee equivalent of 300 Million Special Drawing Rights (SDRs) (which converts to approx. INR 39 Billion as on date) or such higher amount as the Central Government may notify; and
(b) maximum liability of developers for different categories of nuclear installations is specified in the Second Schedule (extracted hereinbelow), with amounts ranging from INR 1 Billion to INR 30 Billion (approximately USD 33.42 Million to USD 334.2 Million) depending on reactor thermal power.
The Second Schedule to the SHANTI Act provides for the limits of liability of the Developers for different categories of nuclear installation as specified under the relevant Sections of the SHANTI Act. The liability under the Second Schedule is as follows:
| Reactors having thermal power | Limitation (INR in Billion) | Limitation (USD in million6) | |
| 1 | MW > 3600 MW | 30 | 334 |
| 2 | 1500 < MW ≤ 3600 MW | 15 | 167 |
| 3 | 750 < MW ≤ 1500 MW | 7.5 | 83.5 |
| 4 | 150 < MW ≤ 750 MW | 3 | 33.4 |
| 5 | MW ≤ 150 MW | 1 | 11.1 |
Section 14 of the SHANTI Act provides that beyond the liability as prescribed in Second Schedule, the Central Government shall be liable for the nuclear damage. It is interesting to note that as per the proviso to Section 14, the Central Government can assume, in public interest, full responsibility of the liability for a nuclear installation not operated by it.
Right of recourse
Section 16 of the SHANTI Act provides right of recourse to the operator. The right of recourse is exercisable only after the operator has paid the compensation for nuclear damage as specified in the Second Schedule. The Section provides that after fulfilling the pre-condition of paying compensation, the right of recourse can be exercised in two circumstances which are as follows:
(a) where such right is expressly provided for in a contract in writing. This enables the developers to negotiate and secure contractual indemnities, security under the agreements with suppliers, contractors, equipment manufacturers, or other parties in the nuclear supply chain; and
(b) where the nuclear incident has occurred because of commission or omission of an individual with an intention to cause nuclear damage. The said ground addresses scenarios involving deliberate wrongful acts, sabotage, or malicious conduct by third party.
The significance of the right of recourse lies in its dual approach, enabling contractual risk allocation for commercial transactions and also providing for statutory recourse against individuals whose deliberate acts or omissions have cause the nuclear incident.
This provision is critical for both Indian and foreign stakeholders in relation to their nuclear sector contracts and insurance arrangements.
Tariff, Dispute Resolution and Penalties
Tariff
The SHANTI Act empowers the Central Government to fix tariffs for electricity generated from nuclear power plants, following the regime under the Atomic Energy Act that overrides the general electricity regulatory framework under the Electricity Act, 2003. Under Section 37, Central Government is empowered to fix tariffs based on such norms and mechanisms as may be specified by it through notification. The provision further specifies the norms for tariff determination that due regard shall be given to the following cost components, (a) cost of fuel, (b) cost of spent fuel management, (c) decommissioning cost, and (d) other services or factors as decided by the Central Government.
The said provision recognises the unique cost structure of nuclear power generation, including long-term decommissioning and waste management obligations, and centralises tariff-setting authority with the Central Government to ensure appropriate recovery of these specialised costs while maintaining oversight of commercials involved in a nuclear power project.
In the event the operator is dissatisfied with the tariff fixed by the Central Government, it can submit an application to the Atomic Energy Redressal Advisory Council ("Council") for review of the order passed by the Central Government.
Dispute Resolution
The SHANTI Act provides for resolution of disputes through review and appeal of orders / judgments as follows:
- Against the order of Central Government or the AERB: At first instance, a review can be filed against the orders passed by the Central Government, or the Atomic Energy Regulatory Board ("AERB"), before the Council.
- Against the order of the Council: Any order of the Council can be appealed against before the Appellate Tribunal for Electricity ("APTEL").
- Against the order of the Adjudicating Office: Orders by the Adjudicating Officer under Section 70 imposing penalties for violations mentioned therein can be appealed against before the APTEL.
- Against the order of the APTEL: Any order of the APTEL can be appealed against before the Hon’ble Supreme Court as a statutory appeal.
The flow chart of the dispute resolution hierarchy is as follows:
At present, the Central Government is undertaking its fourth attempt at a major amendment of the Electricity Act, 2003 and one of the amendments proposed therein is to increase the strength of the members of APTEL. Given that APTEL will have jurisdiction even under the SHANTI Act now, such increase in members of the APTEL will be a welcome step including in the resolution of number of pending matters.
Penalties
The First Schedule to the SHANTI Act provides for the penalties for categories of breach and violations as specified in Section 70 and 83. The Penalties under the First Schedule is as follows:
| Categories of breach and violations | Penalty (in INR) | Penalty (in USD)7 |
| Severe | Not less than INR 5,000,000 but may extend to INR 10,000,000. | Not less than USD 55,000 but may extend to USD 111,000. |
| Categories of breach and violations | Penalty (in INR) | Penalty (in USD)7 |
| Major | Not less than INR 1,000,000 but may extend to INR 5,000,000. | Not less than USD 11,000 but may extend to USD 55,000. |
| Moderate | Not less than INR 500,000 but may extend to INR 1,000,000. | Not less than USD 5,500 but may extend to USD 11,000. |
| Minor | Not less than INR 50,000 but may extend to INR 500,000. | Not less than USD 550 but may extend to USD 5,500. |
In order to ascertain the penalties, the Central Government has the power to appoint a person not below the rank of a Joint Secretary to the Government of India as the Adjudicating Officer. As stated above, any appeal against the orders passed by the Adjudicating Officer lies before the APTEL.
Right to Takeover
Section 35 of the SHANTI Act establishes the Central Government’s power to novate contracts relating to nuclear activities. The provision applies to contracts involving (a) prospecting or mining of substances from which uranium, thorium, or other prescribed substances can be obtained, (b) production or use of nuclear energy, and (c) research into matters connected to the activities mentioned as (a) and (b).
Under the mechanism of novation provided under Section 35, the Central Government may serve written notice on the parties to a contract, specifying the date on which the rights and liabilities of any party shall be transferred to the Central Government. The notice must specify the time and manner for making objections. The Central Government shall provide the objecting person an opportunity to appear and be heard by an authorised officer, who shall submit a report to the Central Government. Upon receipt of the report, the Central Government may pass such order as it deems fit.
The effect of novation is as follows:
(a) The contract shall operate as if the Central Government were a party in place of the person whose rights and liabilities have been transferred.
(b) Every reference in the contract to that person shall be deemed a reference to the Central Government, in respect of rights exercisable or liabilities incurred on or after that date.
The provision of Section 35 of the SHANTI Act forms part of the Central Government’s general powers to acquire / take over a facility in certain cases involving nuclear materials and activities, ensuring governmental control over strategically sensitive nuclear operations.
Conclusion
The Central Government made its intentions clear, with respect to nuclear power, in the Union Budget 2025-2026. It had stated that the amendments to the Atomic Energy Act and the CLND Act are expected to encourage private sector investments in nuclear power projects. The Central Government also stated that India targets to achieve 100 GW of nuclear energy capacity by 2047 and as of January 30, 2025, India’s nuclear capacity is 8180 MW. The implementation of the SHANTI Act, when it is brought into force, will fulfil this resolve of encouraging private sector investments.
As per the Union Budget 2025-268, the Government is developing Bharat Small Reactors (BSRs) and exploring partnerships with the private sector. BSRs are 220 MW Pressurized Heavy Water Reactors (PHWRs) with a proven safety and performance record. In addition to BSRs, the Bhabha Atomic Research Centre (BARC) is developing Small Modular Reactors (SMRs) for repurposing retiring coal-based power plants and meeting power needs in remote locations. SMRs, are advanced nuclear reactors with a power generation capacity ranging from less than 30 MWe to 300+ MWe, provide a flexible, scalable, and cost-effective alternative to conventional large nuclear reactors. It is expected that the BSRs and SMRs will be encouraged to be used for the nuclear power projects with private sector participation.
As India seeks to enhance its nuclear power capacity to meet growing energy demands and climate commitments, the SHANTI Act seems to be providing the necessary legal and regulatory framework to facilitate this expansion while undertaking measures to ensure nuclear safety, environmental protection and use of international best practices. Nevertheless, the effectiveness of this nuclear regulatory framework for civil use will ultimately depend on the timely formulation of subordinate regulations, the appointment of competent regulatory personnel, adequate funding for safety infrastructure, and sustained commitment to transparency and public accountability in nuclear governance.
This article is for information purposes only. Nothing contained herein is, purports to be, or is intended as legal advice and you should seek legal advice before you act on any information or view expressed herein. Although we have endeavoured to accurately reflect the subject matter of this article, we make no representation or warranty, express or implied, in any manner whatsoever in connection with the contents of this article. No recipient or reader of this article should construe it as an attempt to solicit business in any manner whatsoever. 8 PIB
