Civil nuclear liability has historically been a barrier to foreign investment in India's nuclear sector. Critically analyse how the SHANTI Act, 2025 addresses this.

Q. Civil nuclear liability has historically been a barrier to foreign investment in India's nuclear sector. Critically analyse how the SHANTI Act, 2025 addresses this. (15 marks, 250-350 words)

The Civil Liability for Nuclear Damage Act, 2010 granted operators a right of recourse against suppliers of defective equipment — a departure from global practice that deterred foreign reactor vendors for over a decade. The SHANTI Act, 2025, which received Presidential assent on 21 December 2025 and repeals both the CLNDA, 2010 and the Atomic Energy Act, 1962, seeks to remove this bottleneck [3].

How the Act addresses the liability barrier - Supplier liability removed: the Act withdraws the right of recourse on grounds of defective equipment or material, channelling liability to the operator and aligning India with international conventions [3]. - Graded, predictable liability: against the CLNDA's flat ₹1,500 crore ceiling, operator liability is now tiered by installed capacity — ₹100 crore for small and fuel-cycle facilities up to ₹3,000 crore above 3,600 MW — enabling accurate insurance pricing [3]. - Overall cap defined: total liability per incident is capped at the rupee equivalent of 300 million SDR, giving investors an outer limit [1]. - Regulatory certainty: the AERB gains statutory status, and private or joint-venture entities may build, own and operate plants under a Central Government licence plus AERB safety authorisation [2].

Critical assessment — limits that persist - Rules not yet notified: as of July 2026 subordinate rules remain in the drafting stage, so no private licence has been issued — reform on paper precedes reform on ground [1]. - Foreign equity restricted: licences are barred to companies incorporated outside India, so foreign firms enter only as suppliers or minority partners [3]. - Sovereign carve-outs: enrichment, heavy-water production and spent-fuel management stay exclusively with the Government, limiting full-cycle commercial entry [2]. - Diluted supplier accountability also raises victim-compensation and safety-incentive concerns, requiring a robust insurance pool.

The Act therefore resolves the legal deterrent while leaving the operational one intact. Swift notification of rules, a deepened nuclear insurance pool and calibrated foreign-equity liberalisation would convert this statutory promise into investment, advancing India's 100 GW-by-2047 goal and its net-zero commitment.

(~330 words)

Sources: 1. PIB — Parliament Question: Private Sector Participation in Nuclear Energy (23 July 2026) — rules still in drafting stage; 300 million SDR overall cap; operator liability tiers 2. PIB — The Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Bill, 2025 — private participation scope, licence plus AERB safety authorisation, government-reserved fuel-cycle activities 3. PRS Legislative Research — Bill Summary, SHANTI Bill, 2025 — repeal of AEA 1962 and CLNDA 2010, removal of right of recourse, ₹100–3,000 crore tiers against the earlier ₹1,500 crore cap, bar on foreign-incorporated companies