Opening the reactor gates: Private participation under new nuclear law

India has taken a resolute step towards long-term energy security with the enactment of the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Act, 2025 (SHANTI Act). The SHANTI Act forms a central pillar of India’s roadmap to achieve energy independence and net-zero emissions by 2070, and to scale nuclear power capacity to 100 GW by 2047. In doing so, it replaces the Atomic Energy Act, 1962 (Atomic Energy Act) and the Civil Liability for Nuclear Damage Act, 2010 (CLND Act).

A key structural reform under the SHANTI Act is the calibrated opening of the nuclear sector to participation by private entities. The enactment of the SHANTI Act must also be viewed in the broader context of India’s National Nuclear Mission, announced in the Union Budget 2025–26, which emphasises the deployment of Bharat Small Reactors and Bharat Small Modular Reactors, and envisages a substantial role for private sector participation in nuclear power generation.

Licensing regime under the SHANTI Act

The SHANTI Act mandates licensing for building, owning, operating or decommissioning nuclear power plants or reactors; fabrication and processing of nuclear fuel, including uranium enrichment up to notified thresholds; transportation, storage, import, export, acquisition or possession of nuclear fuel, spent fuel or other prescribed substances; and the import or export of prescribed equipment, technology or software used in nuclear-related activities. The Central Government is also empowered to notify additional facilities or activities that require a licence.

A broad category of entities—including Government departments, government-owned or controlled bodies, government companies, private companies, joint ventures, and other persons expressly permitted by the Central Government—are eligible to apply for a licence.

The licensing regime under the SHANTI Act significantly relaxes the earlier restrictions under the Atomic Energy Act, which prohibited the grant of licences for the acquisition, production, possession, use, disposal, export or import of any plant designed or intended for the production, development or use of atomic energy, or for related research, to any person other than a Central Government department, a government-established authority, institution or corporation, or a government company. This limitation under the Atomic Energy Act fundamentally restricted private sector participation in nuclear energy generation in India.

Centralised control of strategic nuclear resources

While the SHANTI Act expands licensing eligibility, it reserves certain sensitive nuclear facilities and activities exclusively for the Central Government. These include the enrichment or isotopic separation of prescribed or radioactive substances (unless otherwise notified), management of spent fuel—covering reprocessing, recycling, separation of radionuclides and handling of high-level radioactive waste—and any other facilities or activities notified by the Central Government.

Further, the mining and working of onshore or offshore areas containing uranium or thorium, as well as the decommissioning of such mines, may be carried out only by the Government, a government company or a government-owned or controlled corporation, and only pursuant to a licence and safety authorisation.

These reservations reflect a balanced liberalisation framework, whereby private participation is encouraged in non-strategic segments of the nuclear value chain, while sovereign control is retained over critical and sensitive nuclear resources and activities.

Nuclear liability framework

The provisions of the SHANTI Act governing liability arising from a nuclear incident are broadly aligned with those under the CLND Act, with two key deviations:
(i) Section 4(iv) of the CLND Act, which imposed strict, no-fault liability on the operator of a nuclear installation, has been omitted; and
(ii) Section 17(b) of the CLND Act, which granted operators a right of recourse against suppliers or their employees after paying compensation for nuclear damage—covering defects in equipment or sub-standard services—has also been removed.

Section 17(b) of the CLND Act had been a major concern for international nuclear suppliers engaging with the Indian market. While the Central Government had maintained that the CLND Act was broadly consistent with the Convention on Supplementary Compensation for Nuclear Damage (CSC), industry stakeholders highlighted that allowing operator recourse against suppliers for patent or latent defects or sub-standard services departed from international norms under the CSC framework. This exposure to potentially open-ended liabilities discouraged international contractors from participating in Indian nuclear projects.

By removing supplier recourse under Section 17(b) and easing the strict no-fault liability regime for operators, the SHANTI Act is expected to encourage greater private and foreign participation in the nuclear sector.

Promotion of indigenous research and development

The SHANTI Act empowers the Central Government to grant patents for inventions relating to the peaceful use of nuclear energy and radiation. However, inventions connected with specified nuclear activities, or those considered sensitive or having national security implications, are excluded from patent protection and deemed to belong to the Central Government.

In contrast, Section 20 of the Atomic Energy Act completely prohibited patents on such inventions, limiting private participation in nuclear research and development. This shift under the SHANTI Act is expected to promote indigenous research and development and incentivise private sector innovation within the nuclear energy ecosystem.

Conclusion

The SHANTI Act marks a significant shift in India’s civil nuclear framework by expressly enabling private sector participation. While it establishes the broad structural framework for the entry of private players into the nuclear energy sector, the practical scope and effectiveness of such participation will depend on the rules and regulations notified under the Act, as well as consequential changes to allied laws and policies. For instance, atomic energy currently remains a prohibited sector under India’s foreign direct investment policy. Revisiting this restriction will be critical to achieving the broader objectives of the SHANTI Act.

Megha Arora is a Partner with CMS IndusLaw. Abhishek Rohatgi works as an Associate at CMS IndusLaw