Context

The recently passed SHANTI Act, adopted during the Winter Session of Parliament, marks a major shift in India’s nuclear energy governance architecture. The Act opens the nuclear power sector to private participation and substantially alters the liability regime established under the Civil Liability for Nuclear Damage Act (CLNDA), 2010. While the government projects it as a reform to attract investment and expand nuclear capacity, the law has generated debate regarding safety, accountability, and long-term economic risks.

Background: India’s Nuclear Liability Regime

India enacted the CLNDA in 2010 following the India–US Civil Nuclear Agreement (2008). The law sought to balance two objectives:

1. Enable international nuclear commerce.
2. Protect citizens in case of nuclear accidents.

A crucial feature of CLNDA was the “right of recourse” (Section 17), which allowed nuclear operators to sue suppliers if an accident resulted from defective equipment or design flaws. Additionally, Clause 46 allowed victims to invoke other civil or criminal laws beyond the Act.

India’s framework was considered stricter than global norms under the Convention on Supplementary Compensation (CSC), where liability is typically channelled exclusively to the operator.

Key Features of the SHANTI Act

The SHANTI Act introduces three structural changes:

1. Private Sector Participation

The Act ends the Union government’s exclusive control over nuclear plant operations, allowing private entities to operate nuclear power plants. Until now, nuclear energy generation in India was largely dominated by Nuclear Power Corporation of India Limited (NPCIL), a public sector enterprise.

2. Alteration of Liability Structure

The Act:

• Indemnifies nuclear suppliers by removing the operator’s right of recourse.
• Caps operator liability between ₹100 crore (small plants) and ₹3,000 crore (large plants).
• Limits total accident liability, including the Centre’s contribution, to 300 million Special Drawing Rights (SDRs) (~₹3,900 crore).
• Removes Clause 46, thereby restricting victims’ ability to pursue claims under other laws.

This aligns India’s liability rules with international supplier-friendly standards.

3. Regulatory Framework Changes

The Act provides a legislative framework for the Atomic Energy Regulatory Board (AERB) but stipulates that its members will be selected by a committee constituted by the Atomic Energy Commission (AEC), raising concerns about regulatory independence.

Global Accident Context and Supplier Liability Debate

Historical nuclear disasters highlight the importance of supplier accountability:

• Three Mile Island (1979, USA) – Design and communication flaws identified.
• Chernobyl (1986, USSR) – Reactor design vulnerabilities contributed.
• Fukushima (2011, Japan) – Design weaknesses in containment structures exacerbated damage.

Critics argue that removing supplier liability ignores lessons from these accidents and may create a “moral hazard”, where reduced accountability encourages risk-taking.

Liability Cap vs Potential Damage

Comparative data underscores the scale mismatch:

• Fukushima estimated cost: ₹46 lakh crore.
• Chernobyl losses (Belarus estimate): ₹21 lakh crore.
• SHANTI Act cap: ~₹3,900 crore.

Even with international compensation mechanisms, total recoverable compensation may remain below 1% of potential catastrophic damage.

Safety Implications

The Act also indemnifies operators for accidents caused by “grave natural disasters,” reversing India’s earlier absolute liability principle (established in the Oleum Gas Leak Case, 1987). This could dilute safety incentives, especially in a climate-vulnerable country.

Nuclear Energy in India: Reality vs Targets

Nuclear power contributes only about 3% of India’s electricity generation. Despite ambitious targets:

• 2000 target: 10 GW (actual: 2.86 GW).
• 2020 target: 20 GW (actual: 6.78 GW).

The new goal of 100 GW by 2047 appears ambitious, especially considering high capital costs and delays. Emerging technologies like Small Modular Reactors (SMRs) remain commercially untested.

Economic Significance

Large nuclear projects involve multi-billion-dollar investments. For example, Westinghouse AP1000 reactors in the U.S. cost approximately $18 billion each. By shielding suppliers and capping liability, the SHANTI Act may enhance investor confidence and attract multinational corporations.

Conclusion

The SHANTI Act represents a paradigm shift in India’s nuclear policy—prioritizing investment facilitation and private participation while recalibrating the liability framework. The central debate revolves around balancing energy security, economic opportunity, regulatory independence, and public safety. For aspirants, the Act is significant from the perspectives of governance, disaster management, environmental ethics, and economic policy.