Introduction

On December 18, 2025, the Upper House of the Parliament of India (Rajya Sabha) passed the Sustainable Harnessing and Advancement of Nuclear Energy Bill, 2025 (‘Shanti Bill’). A day before, the Shanti Bill was passed by the Lower House of the Parliament (Lok Sabha). The Shanti Bill has received the assent of the President of India, following which it has been notified and come into force on December 21, 2025. It is now called the Sustainable Harnessing and Advancement of Nuclear Energy Act, 2025 (‘Shanti Act). The Shanti Act replaces the existing statutory framework established by way of the Atomic Energy Act, 1962, and the Civil Liability for Nuclear Damage Act, 2010 (‘CLND Act’).

The Shanti Act has two primary objectives: (i) opening up various aspects of the nuclear power sector in India to private players (currently, it is solely with the Government); and (ii) addressing long‑standing concerns regarding the liability of, and rights of recourse against, suppliers of equipment, technology, and services to nuclear power plants. Given that the Government of India (‘GOI’) has set itself a target of increasing the total nuclear power capacity from the present 8 GW to 100 GW by 2047, this is one of the key steps towards such objective.

 Entry of Private Players

i.    Under the framework of the Shanti Act, private (non‑government) companies may undertake various nuclear power related activities, including setting up, owning, and operating nuclear power plants; fabrication of nuclear fuel; and import and export of nuclear fuel. However, prior license will need to be obtained from the GOI for undertaking any such activity.

ii.   As such, the GOI would be framing rules in relation to grant of licenses. However, the Shanti Act specifies that a company will not be granted such license if the GOI knows or has reason to believe that it is owned, controlled or dominated by entities who are inimical to defence and national security, or health and safety of the public.

iii.  The Shanti Act does not bar a foreign‑owned Indian company from applying for such licenses. However, under the extant foreign exchange laws, foreign direct investment (‘FDI’) in atomic energy is prohibited. Accordingly, if the GOI intends to permit FDI in the nuclear power sector, it will need to amend the foreign exchange laws appropriately. As the nuclear power sector is very capital intensive, foreign investment will very likely be required, which would mean that the GOI would soon need to amend the FDI related laws.

iv.   As per the Shanti Act, any person may carry out research, development, design, and innovation relating to nuclear energy and radiation for peaceful uses, unless such activities are expressly reserved for the GOI to undertake.

v.    Activities pertaining to the mining of uranium and thorium will remain the exclusive domain of Government/ Government companies.

 Liability Framework

i.    The Shanti Act establishes a strict, no‑fault liability regime for operators of nuclear facilities – this is in line with the liability framework under the CLND Act.

ii.   However, the Shanti Act does not provide operators with a statutory right of recourse against suppliers of equipment and services to the nuclear facilities. Notably, the CLND Act granted the operator a right of recourse against a supplier if the defect in the equipment/ services supplied by it resulted into a nuclear incident. Such a right of recourse was beyond the realm of the contract executed between such supplier and the operator, which was a major concern for many suppliers of equipment, technology and other services to the nuclear power plants. This provision of the Shanti Act is also aligned with international treaties and conventions relating to nuclear energy and also with the laws of many jurisdictions. The Shanti Act not providing a statutory right of recourse to the operators would increase the contractual autonomy of the parties, and, thereby would substantially increase the interest of industry players.

iii.  As regards operators of nuclear facilities, the Shanti Act sets out different caps on operator liability for a nuclear incident depending on the category and capacity of the nuclear installation. In addition, the Shanti Act provides for establishment of a nuclear liability to dispense compensation in the event of a nuclear incident.

iv.   Furthermore, a nuclear liability fund will be established to dispense compensation in the event of a nuclear incident.

 Financial Security and Insurance

i.    The Shanti Act mandates that all licensees (i.e., entities operating nuclear facilities under license) must maintain sufficient financial security, as may be prescribed, to ensure the safe disposal of radioactive substances and settlement of claims. The rules to be framed by the GOI may prescribe specific aspects of this requirement.

ii.   Further, the Shanti Act also requires the operator of a nuclear power plant to maintain insurance or financial security or combination thereof for covering the liabilities set out in the Second Schedule to the Shanti Act. Again, the rules to be framed by the GOI are expected to provide further details on these requirements.

Notably, as per industry sources, the current Indian insurance market does not offer an insurance product tailored to nuclear power plants. Further, a very important ask of the project lenders in India (and internationally too) is that the financing of any project would critically depend on the insurance cover availed of by such project. We understand that in various jurisdictions (other than India), appropriate insurance products are available, from which nuclear power plant owners as well as suppliers/ service providers to nuclear power plants, benefit from. Such insurance products would need to become available in India for the nuclear power industry to meet the GOI targets.

Going Forward

With ambitious headways into the nuclear sector, we expect fast track developments across the board on multiple important fronts – from insurance to foreign investors to lending market. Indeed, we are watching the space closely.