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Relevance: GS-II (Governance); GS-III (Energy Security, Disaster Management) Source: Energy Policy & Legislation Updates, 2026

SHANTI Act 2025 and India’s Clean Energy Push

1 · Context

India has a massive goal: generating 100 GW of clean nuclear power by 2047. To build these reactors quickly, we desperately need foreign technology and private money. However, for years, global giants refused to come to India. Why? Because our old laws allowed them to be sued for billions if a faulty machine part they supplied caused an accident.
To fix this, the government passed the SHANTI Act, 2025. This new law completely protects equipment suppliers, placing the entire financial risk of a disaster on the plant operator. This raises a major constitutional debate: Are we sacrificing the “Polluter Pays” principle and public safety (Article 21) just to attract foreign investments and technology?

2 · Changing the Rules of Nuclear Energy

Step 1: The Old Fear (CLNDA 2010)
The previous law allowed plant operators to sue suppliers if a disaster was caused by defective equipment. This strict rule scared global investors away from India.
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Step 2: The SHANTI Solution (2025)
To attract players, the new law removes this fear. Suppliers are now shielded from liability unless there is clear proof of intentional sabotage.
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Step 3: Flexible Penalties
Instead of a fixed penalty for every disaster, the new law introduces “graded” caps based on the reactor’s size. An expert group will update these limits every 5 years.
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Step 4: The Supreme Court Challenge
Critics have challenged the Act in court, arguing that removing the legal fear of bad manufacturing puts millions of Indian lives at extreme risk.

3 · Key Legal & Policy Terms

Right of Recourse
The Lost Shield
The legal right of a plant operator to turn around and sue the equipment supplier. The SHANTI Act practically removes this right to make doing business easier.
AERB Gets Teeth
Stronger Watchdog
The Act finally grants “statutory status” to the Atomic Energy Regulatory Board (AERB), giving it much more power to strictly enforce safety standards.
Breaking the Monopoly
Private Entry
By replacing the 60-year-old Atomic Energy Act, 1962, this new law officially ends the government’s absolute monopoly, allowing private companies into the nuclear sector.
Polluter Pays Principle
Who Bears the Cost?
A core rule stating those who cause damage must pay. Critics argue that shielding foreign suppliers forces Indian taxpayers to bear the financial risk of a disaster.

Prelims Quick Facts: Treaties & Rules
CSC Treaty (1997) The Convention on Supplementary Compensation is a global treaty India ratified in 2016. The SHANTI Act aligns perfectly with it by favoring supplier protection.
Dynamic Liability Under Rule 78, compensation limits are no longer fixed forever. A multi-disciplinary expert group will update these financial caps every five years to match inflation.
Insurance Pool (INIP) To help plant operators afford the massive financial risks, Indian public sector insurers created a special Nuclear Insurance Pool back in 2015.
No-Fault Regime In a disaster, the plant operator must pay victims immediately. They cannot delay payouts by arguing in court over whose fault the accident was.

MCQ Practice Question
Q. With reference to the SHANTI Act, 2025 and nuclear liability in India, consider the following statements:

  1. The Act strengthens the “Right of Recourse”, allowing plant operators to more easily sue foreign suppliers for patent defects in equipment.
  2. It replaces the old flat liability cap with a graded, capacity-based limit that is reviewed every five years.
  3. The Act aligns India’s domestic nuclear laws closer to the framework of the Convention on Supplementary Compensation (CSC), 1997.

Which of the statements given above is/are correct?
(a) 1 and 2 only    (b) 2 and 3 only    (c) 1 and 3 only    (d) 1, 2 and 3

Answer: (b) 2 and 3 only

  • Statement 1 — Incorrect (the trap): The SHANTI Act actually removes the old rule that allowed operators to easily sue suppliers for defects. It aims to protect suppliers to attract investment.
  • Statement 2 — Correct: The Act introduces graded liability caps based on reactor size (e.g., ₹3000 crore for huge plants) and establishes an expert group to review these limits every five years.
  • Statement 3 — Correct: By placing the burden almost entirely on the operator and shielding the supplier, the Act brings India in line with international CSC 1997 norms.
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