After Reading This Article You Can Solve This UPSC Mains Model Question:
The SHANTI Act seeks to accelerate India’s clean energy transition and achieve 100 GW nuclear capacity by 2047. Critically examine whether the reform balances commercial viability with public safety. (250 words) (GS-3, Science and Technology)
Context
- Parliament has recently passed the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act, which allows private companies to enter the nuclear power sector. It repeals the Atomic Energy Act, 1962 and the Civil Liability for Nuclear Damage Act (CLNDA), 2010, and establishes new regulatory and liability frameworks.
- The Shanti Act is aimed at accelerating India’s clean energy transition and achieving a 100 GW nuclear capacity target by 2047. However, it has raised concerns over supplier indemnification, dilution of liability provisions, and possible moral hazard affecting public safety.
Background: Rationale for the Reforms under the SHANTI Act
The SHANTI Act marks a structural shift from a closed, state-led model to a liberalized, hybrid ecosystem. The rationale for this overhaul is rooted in several critical factors:
- Persistent Stagnation in Energy Share: Despite being a priority for decades, nuclear power has accounted for only about 3% of India’s total electricity generation. The present nuclear capacity stands at a modest 8.78 GW, failing to become a primary energy pillar.
- Historical Failure to Meet Targets: The sector has a legacy of missed milestones; in the 1980s, a target of 10 GW by 2000 was set, but only 2.86 GW was achieved. Similarly, the 2006 target of 20 GW by 2020 resulted in an actual capacity of only 6.78 GW.
- Systemic Bottlenecks and Delays: These failures stem from high capital costs, safety concerns, and chronic project delays. A prime example is the Prototype Fast Breeder Reactor (PFBR) at Kalpakkam; originally scheduled for commissioning in 2010, it has yet to become operational.
- Need for Resource Mobilization: Opening the sector enables private participation to expand capital availability, attracting the domestic and global investment required to scale operations beyond the limitations of public funding.
- Access to Advanced Technology: Private sector entry is intended to accelerate the adoption of advanced technologies, such as Small Modular Reactors (SMRs) and modern safety systems. However, it has been found that SMRs remain an untested technology with potentially higher estimated capital costs per unit of power.
Core Features of the SHANTI Act
The SHANTI Act represents a significant overhaul of India’s nuclear energy policy, positioned as a critical reform to achieve the national target of 100 GW nuclear capacity by 2047 and support the long-term goal of decarbonization by 2070.
- End of State Monopoly: The Act terminates the government’s exclusive control over nuclear power. It permits private companies and joint ventures to operate plants, generate power, manufacture specialized equipment, and engage in fuel fabrication.
- Strategic Government Control: Sensitive “fuel-cycle” activities—including uranium enrichment, management of spent fuel, and thorium processing—are reserved exclusively for the Central government.
- Statutory Status for AERB: The Atomic Energy Regulatory Board (AERB) is granted statutory status to strengthen its authority. It is now answerable to Parliament rather than solely to the executive.
- Graded Liability System: A clear, tiered financial liability cap is established for operators based on the size of the installation:
- Large Plants: ₹3,000 crore.
- Medium Plants: ₹1,500 crore.
- Small Modular Reactors (SMRs): ₹100 crore.
- Nuclear Liability Fund: For damages exceeding the operator’s cap, the Central Government provides coverage through a dedicated fund. The total liability for any single incident is capped at 300 million Special Drawing Rights (SDRs), approximately ₹3,900 crore.
- Complete Supplier Indemnity: In a major shift from the CLNDA 2010, the “right of recourse” against suppliers is removed. Suppliers are now exempt from civil or criminal liability, even if an accident is caused by defective equipment; all legal liability is channeled solely to the plant operator.
- Legal Consolidation: The Act omits Clause 46 of CLNDA, preventing victims from using other civil or criminal laws to seek additional remedies. All claims must now be processed specifically through the mechanisms defined in this Act.
- Oversight of Non-Power Uses: Beyond energy, the Act provides a structured framework for the peaceful application of radiation in healthcare (radiotherapy), agriculture, and industrial research, including a licensing system for these activities.
- Adjudication Mechanisms: To manage disputes and ensure timely compensation, the Act establishes the Atomic Energy Redressal Advisory Council and a specialized Nuclear Damage Claims Commission. The Appellate Tribunal for Electricity serves as the final appellate body.
- International Alignment: The compensation scope is extended to cover damage caused in foreign territories by an incident in India, aligning domestic rules with global treaties like the Convention on Supplementary Compensation (CSC).
Significance of the SHANTI Act
The SHANTI Act is designed to transform nuclear energy into a high-value commercial market, offering massive financial incentives for private industry.
- Massive Market Scale: Individual nuclear projects involve huge investments. For example, two Westinghouse AP1000 reactors in the U.S. recently cost about $18 billion each. The Act opens this multi-billion dollar market to private players in India.
- Profit Without Liability: The Act allows private corporations and foreign suppliers to earn significant profits from these projects. Crucially, it ensures they can do so without the risk of facing heavy financial consequences or lawsuits if an accident occurs.
- Incentivizing Private Investment: By removing the “right of recourse” (the ability to sue suppliers for defective equipment), the government has removed the biggest “risk barrier” for global companies, making India an attractive destination for Foreign Direct Investment (FDI).
- Business-Friendly Environment: The Act aims to ensure that private ventures can proceed quickly. It balances regulatory oversight with the need for speed, ensuring that regulations do not become an obstacle to the profitability of nuclear power plants.
Critical Concerns: Accountability and Safety Risks
The transition to the SHANTI Act framework introduces significant concerns regarding the balance between industrial growth and public protection.
- Gross Disparity in Compensation: The total liability cap under the Act (approx. ₹3,900 crore) is nearly a thousand times smaller than the actual costs of historical disasters. For instance, the Fukushima accident costs are projected to reach ₹46 lakh crore, and the Chernobyl disaster cost Belarus alone ₹21 lakh crore, leaving an area the size of Goa as a restricted “Exclusion Zone” for 40 years.
- Financial Burden on Victims: Even with international funds from the Convention on Supplementary Compensation (CSC), total available money is unlikely to cover even 1% of potential damage. Under the Act, victims have no legal right to seek compensation beyond this cap, potentially forcing citizens to bear the loss of life and property on their own.
- Issue of “Moral Hazard”: By shielding private operators and suppliers from the full financial weight of a catastrophe, the Act creates a moral hazard. This insulation from consequences may discourage the industry from maintaining the highest safety standards and encourage greater risk-taking.
- Dilution of Absolute Liability: The Act indemnifies operators for accidents caused by “grave natural disasters.” This reverses India’s established legal principle of “absolute liability” for hazardous industries. Since the Fukushima disaster was caused by a tsunami, this exemption is seen as a major loophole that reduces the incentive to build ultra-resilient plants.
- Prioritizing Corporate Interests: While the liability cap protects private nuclear operators from financial ruin and encourages investment, it effectively shifts the massive socio-economic risk of a nuclear accident away from the corporations and onto the State and its citizens.
Additional Initiatives to Promote Nuclear Energy
- National Nuclear Energy Mission: Established in the Union Budget 2025-26 with a ₹20,000 crore outlay, this mission focuses on the design and deployment of Small Modular Reactors (SMRs). The objective is to have five indigenous SMRs operational by 2033 to accelerate the clean energy transition.
- Indigenous Innovation via BARC: The Bhabha Atomic Research Centre is pioneering the 200 MWe Bharat Small Modular Reactor (BSMR‑200). This initiative aims to establish a local supply chain and reduce technological import dependency.
- Three-Stage Power Programme: This long-term strategy ensures fuel security by progressing from PHWRs to Fast Breeder Reactors, eventually utilizing India’s extensive Thorium reserves for near-infinite energy sovereignty.
- International Nuclear Alliances: Through agreements like the 123 Agreement and partnerships with Russia and France, India secures global fuel supplies and advanced reactor technology, overcoming domestic uranium limitations.
Way Forward: Strengthening the SHANTI Act Framework
- Strengthening Regulatory Independence: The AERB must be granted full functional autonomy, moving away from the influence of the Atomic Energy Commission, to ensure safety is not compromised for commercial speed.
- Revisiting Liability Caps: To protect citizens, the liability caps should be indexed to inflation or linked to the potential scale of disasters, ensuring that compensation remains realistic in the event of a major accident.
- Ensuring Contractual Recourse: While the Act omits statutory recourse, operators must be encouraged to include stringent indemnity clauses in private contracts with suppliers to maintain a check on equipment quality.
- Focusing on Indigenous R&D: Reliance on high-cost foreign technology should be balanced by accelerating the Three-Stage Nuclear Power Programme, utilizing India’s vast thorium reserves to ensure long-term energy sovereignty.
- Public Awareness and Transparency: Given the history of nuclear apprehensions, a robust public communication framework is required to build trust regarding the safety protocols of new private-sector-operated plants.
Conclusion
The SHANTI Act marks a significant step toward liberalizing India’s nuclear sector and advancing its Net Zero 2070 goals. However, the provisions on supplier indemnification and liability caps raise serious concerns about public safety and accountability. Its success will depend on balancing ease of doing business with strict safety standards and fair compensation mechanisms.
