New bill to open nuclear power to private sector, remove supplier liability

The Union government introduced the much-anticipated bill on Monday to open up nuclear power generation to private players, while excluding global suppliers of components and fuel from liability.

The ‘Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Bill, 2025’ (SHANTI) permits any company or joint venture to construct, own, operate, or decommission a nuclear power plant or reactor within the country.

Currently, only government-owned companies are permitted to establish nuclear power plants.

Approved by the Union Cabinet on Friday (December 12), the legislation aims to boost investments in the nuclear power sector to help India achieve its ambitious target of 100GW of nuclear power capacity by 2047. According to a Goldman Sachs report last week, the Indian government is estimated to place 1,400 megawatts (MW) of nuclear reactor orders annually until fiscal year 2034 (FY34), with small modular reactors (SMR) orders commencing from FY32.

Indian conglomerates, including the Adani Group, Larsen & Toubro (L&T), and Tata Power Ltd, have publicly shown interest in entering the nuclear energy space.

Easing liability fears

The bill, tabled by the Union minister for state for atomic energy Jitendra Singh, noted that any department, institution or company of the government, a joint venture or any other person permitted by the Centre shall be eligible to apply for a licence for the purposes of setting up nuclear power facilities or any other related activities, and import and transportation of nuclear fuel.

However, the enrichment or isotopic separation of radioactive substances would be exclusively undertaken by the Centre or any institution wholly owned by it, unless otherwise notified.

Along with exempting research, development and innovation activities from the requirement of licence, the bill would “provide for a pragmatic civil liability regime for nuclear damage”, according to its statement of objects.

The bill says that the operator of the nuclear installation shall be liable for nuclear damage caused by a nuclear incident in the installation, or involving nuclear material transported from that installation, if it occurs before the liability for nuclear incident involving such nuclear material has been assumed, pursuant to a written agreement by another operator or another operator has taken custody of such nuclear material.

However, the operator would be exempt from liabilities in case of damages caused by a nuclear incident due to “a grave natural disaster of an exceptional character, an act of armed conflict, hostility, civil war, insurrection or terrorism”.

The bill proposes to eliminate the contentious supplier liability clause– Section 46 of the Civil Liability for Nuclear Damage Act (CLND Act). Global suppliers of components and fuel had been concerned about the law allegedly allowing action against suppliers in case of any damage.

In 2015, the ministry of external affairs, through a number of FAQs (frequently asked questions), had clarified that Section 46 does not permit victims of a nuclear accident to bring civil law claims against suppliers, but global suppliers have still been concerned over its applicability.

The government has now proposed to completely do away with this section in a bid to allay their concerns. This section has been a major deterrent for several US companies from building nuclear power plants in India.

“This should help in investments and achieving a trade deal with the US,” said Kirit Parikh, former member (energy) at the erstwhile Planning Commission. “The liability clause has always been bothering everyone. Those countries wanted some relaxation or cuts. Now this move should bring the norms as per global standards.”

The bill also proposes changes to the ‘rights to recourse’ for operators, allowing them to seek reimbursement from third parties such as suppliers for faulty components or other issues.

The existing CLND Act says that the operator of the nuclear installation, after paying the compensation for nuclear damage, shall have a right of recourse in case “the nuclear incident has resulted as a consequence of an act of supplier or his employee, which includes supply of equipment or material with patent or latent defects or sub-standard services”. But the new proposed SHANTI bill omits this specific point or a mention of suppliers or their employees.

Section 17 of the proposed bill retains other clauses, and says that the operator shall have a right of recourse where such a right is provided for in a contract in writing and the nuclear incident has occurred because of an individual with the intention to cause nuclear damage.

Boost to India-US ties

Energy has been a key subject of the India-US talks on the bilateral trade deal. Along with increased supplies of oil and gas from the US, India has also been offering investment opportunities in nuclear power to the American side, largely in the still-nascent small modular reactor (SMR) space, where India lacks the required technology.

“It is critical to align civil nuclear liability for operators and suppliers with international standards to attract global technology providers as well as private investors,” said Anujesh Dwivedi, partner at Deloitte India.

He, however, said that while currently, the tariff for nuclear power is governed by the Department of Atomic Energy (DAE), in consultation with the Central Electricity Authority (CEA), private sector participation will necessitate governance by an independent regulator, enabling the possibility of competitive determination of tariffs.

According to the bill, the central government shall fix the tariff for power from nuclear power plants based on such norms and mechanisms as may be specified by it by notification.

The government has proposed to set up an Atomic Energy Redressal Advisory Council, led by the chairperson of the Atomic Energy Commission, which would hear complaints of any licensee or operator, along with fixing tariffs.

“Also, involving the private sector in research and development of nuclear technologies for civil use, such as the development of Small Modular Reactors (SMRs), by allowing the creation of intellectual property rights would be a progressive step and in line with the approach adopted by several developed countries,” Dwivedi said.

Praveer Sinha, chief executive of Tata Power, told Mint in August that the company was keen to set up small nuclear reactors, but first the government had to clear the policy framework for the sector. The company was waiting for more details on liability, technology, foreign partnerships and on fuel sourcing, Sinha said in a post-earnings investor call in February.

Adani Group chief financial officer Jugeshinder Singh told NDTV Profit last month, “If the government can find out a public-private partnership (PPA) model, then we would be, of course, very much interested,” Singh said, as reported by NDTV Profit.

L&T, a leading developer of thermal power plants, signed an agreement with US-based nuclear energy solutions provider Holtec International’s Asia arm for heat transfer equipment last month.

L&T has a total addressable market of 422,680 crore in the nuclear space by FY30, analysts at Goldman Sachs estimated in the note. The business can add 45 basis points to L&T’s consolidated margins between FY30 and FY35, they estimated.