SHANTI Act 2025: How India's New Nuclear Law Opens the Sector to Private Players

India's nuclear energy sector operated as a state monopoly for 63 years. The Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Act, 2025 (SHANTI Act) changes that. Passed by both Houses of Parliament in December 2025 and brought into force on December 21, 2025, the Act repeals two foundational statutes: the Atomic Energy Act, 1962 and the Civil Liability for Nuclear Damage Act, 2010. In their place, it creates a single consolidated legal framework that, for the first time, permits private Indian companies to build, own, and operate civil nuclear power plants.

Legislative Background and What the Act Replaces

The Atomic Energy Act, 1962 gave the Central Government exclusive control over all nuclear activities in India, treating atomic energy as a domain too sensitive and strategically significant for private or commercial participation. The Civil Liability for Nuclear Damage Act, 2010 governed liability in the event of a nuclear incident but contained a provision under Section 17(b) that allowed operators to seek recourse against suppliers whose equipment caused or contributed to an incident. That provision made international nuclear suppliers, particularly American and French companies, reluctant to enter the Indian market, since it exposed them to liability beyond their contractual arrangements. The SHANTI Act was introduced in the Lok Sabha on December 15, 2025 by the Minister of State for Science and Technology, Dr Jitendra Singh. The Lok Sabha passed it on December 17, 2025, the Rajya Sabha on December 18, 2025, and President Droupadi Murmu gave her assent on December 20, 2025. The Act came into force the following day.

Opening the Sector to Private Participation

The most significant change is the permission extended to private Indian companies and joint ventures to seek licences for civil nuclear projects, including constructing, owning, operating, and decommissioning nuclear power plants, as well as fabricating, converting, refining, and transporting nuclear fuel. Foreign-incorporated entities are expressly excluded from this framework. The liberalisation is calibrated. Certain activities remain exclusively reserved for the Union Government or wholly government-owned entities: uranium enrichment beyond a specified threshold, isotopic separation, spent fuel reprocessing, radioactive waste management beyond on-site storage, and heavy water production. The strategic core of India's nuclear programme stays under government control; private participation is permitted around it. The Atomic Energy Regulatory Board (AERB) receives full statutory recognition under the Act. Previously created by executive order in 1983, the AERB's statutory status was long demanded by India's international partners as a precondition for technology sharing and joint ventures. This change makes the AERB accountable to Parliament rather than merely to the executive. Section 9 of the Act also permits research, development, design, and innovation in nuclear energy and radiation for peaceful purposes without a licence, a meaningful liberalisation from the 1962 Act which required licensing for all activities involving prescribed substances.

The Liability Framework Restructured

The liability architecture is where the SHANTI Act makes its most contentious departure. Under the Civil Liability for Nuclear Damage Act, 2010, operators had an automatic statutory right of recourse against suppliers whose equipment was defective or caused harm. Under the SHANTI Act, that automatic right is abolished. Operator liability now operates under a graded cap system. For large reactors above 3,600 megawatts of thermal capacity, the operator's maximum liability is INR 3,000 crore per incident. For smaller reactors and fuel cycle facilities, the cap is INR 100 crore. The overall liability ceiling per incident is set at 300 million Special Drawing Rights, approximately INR 3,900 crore at current exchange rates. An operator's recourse against a supplier is now limited to two circumstances only: first, where it is expressly provided in a written contract between the operator and the supplier; and second, where the nuclear incident results from an intentional act or omission by the supplier to cause harm. Outside these two situations, suppliers bear no liability.

RTI Exemptions and the Transparency Question

Section 39 of the Act grants the Central Government wide authority to declare categories of nuclear-related information as restricted. Restricted information includes the location, quantity, and quality of nuclear materials, transactions involving nuclear substances, plant design and siting, construction and operational details, and regulatory submissions. Section 39(4) explicitly disapplies the Right to Information Act, 2005 to restricted information, with no provision for public interest override or appeal. This is a significant departure from the standard RTI framework, under which even sensitive information can be disclosed if the public interest in disclosure outweighs the reasons for withholding it. Under the SHANTI Act, that balancing test does not apply to restricted nuclear information. Transparency advocates and civil society organisations have flagged this as a structural deviation from both domestic RTI principles and international best practices in nuclear regulation, which typically include public disclosure requirements for safety-related information.

Constitutional Challenge Before the Supreme Court

A Public Interest Litigation challenging the constitutional validity of the SHANTI Act has been filed in the Supreme Court by a group of former senior officials and scientists, including former Union Power and Finance Secretary E.A.S. Sarma, former Finance Secretary S.P. Shukla, and CSIR Chief Scientist Professor Dinesh Abrol. The petition challenges the Act under Articles 14, 19, and 21 of the Constitution. The petitioners argue that the liability cap of INR 3,000 crore is wholly inadequate protection for citizens in the event of a major nuclear incident, pointing to the scale of damages from Fukushima and Chernobyl as reference points. They also challenge the removal of automatic supplier liability as a rollback of safeguards India put in place following the Bhopal gas tragedy. A bench of the Chief Justice and Justice Joymalya Bagchi has described the challenge as raising extremely sensitive issues requiring detailed hearing. The proceedings are ongoing and will generate significant jurisprudence on statutory liability caps under Article 21, the constitutional scope of RTI exemptions, and the framework for large-scale industrial risk allocation in India.

Implications for Legal Practice

The SHANTI Act opens substantial new work streams across several practice areas. Nuclear project development will require licensing advice, regulatory compliance before the AERB, environmental clearances, and land acquisition frameworks. Joint venture structuring between private Indian companies and government entities involves complex corporate and competition law considerations, including Foreign Direct Investment norms that permit up to 49 percent equity under the automatic route in specified nuclear activities. Suppliers negotiating contracts with nuclear operators must now address liability recourse clauses with precision: the statutory floor has been removed, and the scope of supplier exposure depends entirely on the written contract. Intellectual property considerations have also expanded, since Section 38 of the Act now permits patents for inventions in the peaceful use of nuclear energy, a category previously restricted.

Practical Takeaways

The SHANTI Act is a structural reform of considerable ambition. India's nuclear capacity currently stands at approximately 7.5 to 8.8 gigawatts. The government's target is 100 gigawatts by 2047, with an interim goal of 22 gigawatts by 2032. The Union Budget 2025-26 also allocated INR 20,000 crore for a Nuclear Energy Mission aimed at operationalising five indigenously designed Small Modular Reactors by 2033. Reaching these targets requires private capital at a scale the state alone cannot provide. The SHANTI Act creates the legal framework for that investment. Whether the liability framework is sufficient to attract the international suppliers and private investors India needs, and whether it survives constitutional scrutiny before the Supreme Court, are the two questions that will define the Act's practical effectiveness in the years ahead. Businesses, investors, and legal practitioners advising in the energy, infrastructure, and corporate sectors should be tracking both developments closely.