By opening nuclear power to private investment, the SHANTI Act aims to reshape 含羞草社区 energy landscape. The opportunity is clear, but there are operational and regulatory hurdles that any new entrant will have to navigate. Indrajit Basu reports
For six decades, 含羞草社区 nuclear sector has been the exclusive preserve of the state. The Atomic Energy Act of 1962 drew a hard boundary between public and private, and the Civil Liability for Nuclear Damage Act of 2010 reinforced it by saddling equipment suppliers with open-ended liability that made foreign technology partnerships nearly impossible. Private companies have been, effectively, shut out.
All that changes with the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Act, 2025 (SHANTI), introduced in mid-December last year. With a single, modern statute, this bill streamlines regulation, licensing, safety oversight, liability rules and dispute resolution.
It also repeals both predecessor laws, grants statutory authority to the Atomic Energy Regulatory Board (AERB), restructures nuclear liability on terms acceptable to private capital, and opens the door for licensed private operators to build, own and run nuclear power plants for the first time.
“含羞草社区 nuclear sector is [slated for] a paradigm shift,” says Akshay Malhotra, the Delhi-based partner of TT&A.
The timing is deliberate. India has committed to building 100 gigawatts of nuclear capacity by 2047, a target too large for the state-owned Nuclear Power Corporation of India Limited (NPCIL) alone. This utility has long designed, built and operated 含羞草社区 nuclear plants, anchoring the sector’s technical and operational expertise. But, in the face of such massive capacity expansion, private investment is not merely welcome; it is essential.
However, ambition and law are not the same thing as readiness. The key question that lingers for the early years of the SHANTI Act’s framework is whether Indian companies can build the skills, governance and risk appetite to run nuclear projects safely and responsibly.
Institutional capabilities
The biggest challenge facing any Indian conglomerate entering the nuclear sector is not only financial but organisational. Operating a nuclear plant requires technical expertise largely absent in the private sector. It must be built, borrowed or acquired. “To operate within this new framework, private corporations must develop extensive institutional capabilities,” says Malhotra of TT&A. “This includes development of deep technical expertise and a highly skilled workforce compliant with the standards set by the newly empowered … AERB.”
Under the SHANTI Act’s dual-permit structure, every nuclear activity requires both a central government licence and AERB safety authorisation – a two-gate entry that leaves no room for shortcuts.
Skilled talent is another hurdle. The NPCIL is an obvious source. Delhi-based Ramanuj Kumar, partner at Cyril Amarchand Mangaldas (CAM), says retired or retiring NPCIL personnel can move to the private sector, although this requires institutional architecture to function effectively.
Governance is equally critical. Bengaluru-based Megha Arora, a partner at CMS IndusLaw, says nuclear power demands enhanced governance frameworks: dedicated board-level nuclear safety and regulatory compliance committees; reinforced internal controls; and periodic internal and independent audits.
In essence, governance sets a frame but credibility from demonstrable safety performance is also crucial, according to Kumar. Rigorous oversight and transparent reporting will turn nuclear ambition into public trust.
Any real appetite?
Before the SHANTI Act, private interest existed but bankable structures did not. The old nuclear damage law’s open-ended supplier liability made technology partnerships toxic.
The SHANTI Act changes this: operator liability is capped and supplier recourse limited to written contracts or cases of intentional damage. Tiered caps run from INR1 billion (USD11 million) to INR30 billion, depending on reactor capacity, with the central government covering damages beyond that ceiling.
Saket Shukla, the Delhi-based co-founding partner of Phoenix Legal, says the private sector was signalling its intentions even before the SHANTI Act’s enactment. “Around six bidders indicated their keenness in the tender floated by the NPCIL in December 2024, which included Adani Power, JSW Energy, Jindal Steel & Power, Reliance Industries, Tata Power and Hindalco Industries,” he says.
Malhotra says some large infrastructure players are drawn to small modular reactors because they “foresee the baseload energy demand in India continuing to accelerate [with] nuclear power [offering] risk diversification, limited liability framework and opportunity to integrate with renewable energy to offer a blended and competitive tariff to end users, including to growing demand from industrial and data centre customers”.
Indian conglomerates already invest in hydroelectric, pumped storage and transmission projects, with operational lives of 35 to 40 years. Nuclear plants, while longer functioning at 60 years, are not so different that capital management becomes insurmountable. What distinguishes nuclear is regulatory density and operational specificity, not the time horizon alone, says Malhotra.
But Shukla highlights an important caveat: private participation will also be shaped by state-controlled inputs. “Private players will be heavily dependent on the government, which … will control the supply of nuclear fuel, the management and reprocessing of spent fuel, enrichment activities and the production of heavy water,” he says. A robust insurance ecosystem specific to nuclear plants will also need to develop.
Safety and economics
The SHANTI Act creates two regulatory worlds: the Atomic Energy Regulatory Board’s authority over safety and inspections; and an economic reality where tariffs and fuel pricing determine commercial viability. Section 37 allows the central government to fix nuclear tariffs, bypassing the Electricity Act, 2003 framework.
Section 71 poses grave threats for criminal offences, and empowers the government to suspend licences or assume control for safety or national security reasons. Malhotra says this feature makes safety compliance a prerequisite, not a cost offset against returns.
“It is not a case of safety mandates versus power sector economics; return on investment will need to account for the cost of safety compliances,” he says.
Safety is a prerequisite for entry. The liability cap structure makes safety compliance financially quantifiable, which in turn makes project modelling possible.
To bridge the experience gap, the lawyers say the government is promoting hybrid public-private partnership structures where private investors contribute capital, land acquisition and construction expertise while the NPCIL handles nuclear operations, fuel management and safety protocols. This allows private companies to enter without requiring day-one nuclear expertise.
The advisory impact
Nuclear law is not a new discipline but private nuclear transactions at scale are entirely new in India.
Kumar identifies a wide spectrum of emerging advisory work following the SHANTI Act. “[These include] technology collaboration/licensing, safety training, insurance/reinsurance terms and conditions, export control regulations, potential liability sharing mechanisms among private sector operators, corporate structure for shielding exposure to existing business operations and balance sheets, designing governance structures and policies to ensure compliance with licence conditions and regulatory framework, initial and periodic due diligence reports to meet lenders’ reporting, and risk mitigation requirements,” he says.
Of these, technology transfer could be the most complex aspect. 含羞草社区 export control system is centred on the SCOMET list (special chemicals, organisms, materials, equipment and technology) and regulates 含羞草社区 trade in sensitive items with potential military, nuclear or strategic use. The SHANTI Act governs nuclear materials through the Department of Atomic Energy. Shukla says legal advisers “will have to help operators navigate and assist in obtaining the required licence and ensure contractual safeguards around transfer of proprietary information, technical data and know-how, and indigenising technology consistent with any mandatory obligations”.
Section 38(1) of the SHANTI Act permits patents for peaceful uses of nuclear energy but retains restrictions for sensitive inventions and government-owned intellectual property. Structuring licensing agreements within these constraints will require careful legal architecture as well, says Shukla.
Arora strikes a measured note on international treaty obligations: while frameworks like the Convention on Supplementary Compensation for Nuclear Damage operate at the international level, their enforcement in India depends on domestic incorporation under article 253 of the constitution. “Notwithstanding the international dimension, nuclear liability and compliance will finally be governed and implemented through Indian domestic law,” she says.
Shukla sums up broad advisory opportunities. “The role of legal advisers would not necessarily be unprecedented as the basic principles applicable to large projects would be similar,” he says. “[However] it will be complex, requiring a nuanced approach, especially around risks and the evolving new sector.” In other words, existing advisory functions must be retooled rather than reinvented.
Deal structuring
The SHANTI Act does not prescribe a single commercial structure for private nuclear participation. It permits licensed Indian entities to build, own, operate or decommission nuclear plants, leaving the architecture of specific arrangements to market participants. This flexibility is deliberate but creates significant structuring work.
The consensus view is that the most viable frameworks in the SHANTI Act’s early years are likely to be special purpose vehicle or joint venture structures, with a public sector entity holding a protective stake. Malhotra says the “most viable framework appears to be a hybrid public-private partnership executed through a special purpose vehicle”, in which a government entity holds a “golden or decisive share” to force decisions in specific scenarios. In such a structure, the private participant can contribute capital, project management expertise and, where relevant, foreign technology, while the public-sector partner retains operational and regulatory oversight.
One structural constraint distinguishing nuclear from conventional build-own-operate-transfer structures is state ownership of nuclear material. Under the SHANTI Act, nuclear material – including source material, fissile material and spent fuel – remains government property, regardless of who owns the plant. Private operators must hand over spent fuel to government agencies and rely on state-controlled services for fuel enrichment.
Malhotra points to an international example for a toolkit of proven mechanisms. The United Arab Emirates’ Barakah nuclear power project provides a useful model for structuring between a state entity and foreign partners. It brings together the state-owned Emirates Nuclear Energy Corporation and Korea Electric Power Corporation (KEPCO), a South Korean state-backed utility. Together, they established the joint-venture company, Nawah Energy Company, which holds the operating licence and is responsible for operations and maintenance. KEPCO led the construction through a consortium of Korean firms, and continues to play a significant role in plant operations.
In India though, state control under the SHANTI Act is primarily preserved through the statutory framework itself – the power to suspend or cancel licences, assume control of facilities, and fix tariffs – rather than through direct equity control.
Nuclear and board risks
For any general counsel advising a board considering entry into the nuclear sector, the liability framework of the SHANTI Act is both its most important feature and the most carefully designed.
The SHANTI Act channels all civil liability for nuclear damage to the operator through a strict liability standard. The operator is liable regardless of fault, but that liability is capped. Operators must maintain insurance covering their entire statutory exposure.
Malhotra describes how this makes nuclear risk commercially manageable. “The SHANTI … makes the financial risk of a nuclear accident quantifiable and, therefore, manageable from a balance-sheet perspective,” he says. What previously appeared as open-ended catastrophic risk becomes a defined and insurable ceiling within the liability framework.
But the financial cap is not the full picture. Shukla highlights personal criminal liability as a distinct concern. “Under section 72(2), even failures in supervision or oversight may be treated as neglect, exposing individuals to prosecution,” he says. “The proviso shifts the burden of proof on the directors and officers. [It is] only if they can demonstrate that they exercised all due diligence to prevent an offence would they not be held liable.”
Arora has blunt advice. “Boards of companies considering entry into nuclear power should be advised to establish a dedicated nuclear safety and regulatory compliance committee with clearly defined responsibilities and access to technical expertise,” she says. “This should be supported by robust internal compliance systems, regular in-house and third-party audits, clear reporting lines, and documented decision-making processes.” These are not just good governance practices; they can serve as proof of proper due diligence against criminal charges, she says.
Safeguards
There is general agreement that, given the financial, reputational and potential criminal liabilities, robust safeguards must be in place before a responsible board can approve entry into the nuclear sector.
Malhotra identifies the operator liability cap as being foremost, but insists it must be operationally robust. “The primary safeguard is the unambiguous operator liability cap defined in the SHANTI Act, ensuring a quantifiable financial risk ceiling. This must be coupled with an unconditional guarantee from the central government to indemnify [an] operator for all damages exceeding this cap.” Logically, any government discretion to modify the cap without parliamentary process would reintroduce unquantifiable risk.
Shukla says operators will additionally “have to ensure that they have a direct contractual recourse against the central government to cover damages above the operator’s statutory cap, as contemplated under the SHANTI Act”. He advocates a nuclear liability fund to cover compensation beyond INR15 billion, and backed by a government covenant to maintain its liquidity, “ensuring the financial backstop is real and reliable”.
Malhotra warns that “any scenario where the financial backstop could fail or be delayed, exposing the company to unlimited liability, represents a risk that no private company could assume”.
However, Arora says the SHANTI Act is workable. As the act stands, it aligns with global standards by capping liability, limiting claims and preserving key exclusions, providing a credible legal basis for private sector participation. Any weakening of these provisions would make the risks commercially unacceptable.
What next?
Given that the SHANTI Act’s operational detail will be determined by rules and subordinate instruments that are still to be published, “the devil will lie in the details”, says Shukla.
Legal advisers will be expected to match international standards. Institutional capability will grow in both legal practice and corporate boardrooms through learning, building specialist networks and working seriously within a regulatory framework that has no domestic precedent.
The practical message is this: the SHANTI Act is not just energy policy. It is a major commercial development that will generate decades of complex, high-value transactional work across project finance, corporate structuring, regulatory compliance, intellectual property, insurance and dispute resolution. Getting ahead of it early is a professional imperative.
