Draft SHANTI Rules, 2026 Seek to Strengthen Nuclear Liability, Financial Security and Private Participation in India’s Nuclear Expansion

Recent Developments:

• The Department of Atomic Energy released the Draft SHANTI Rules, 2026 for public consultation in August 2026, seeking stakeholder feedback on the proposed nuclear regulatory framework. The consultation deadline is 4 September 2026.
• The draft Rules seek to operationalise the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Act, 2025, commonly referred to as the SHANTI Act, 2025, and provide detailed provisions relating to nuclear liability, insurance and financial security.
• The framework is significant because India is seeking to expand nuclear capacity to 100 GW by 2047 while enabling greater participation of the private sector.
• India currently has 24 nuclear power reactors in commercial operation, excluding RAPS-1, with an installed capacity of 8,780 MW.
• The Government aims to increase nuclear capacity to about 22 GW by 2031–32 and subsequently expand it to 100 GW by 2047.
• The Government has also announced development of at least five indigenous Small Modular Reactors by 2033, including the 220 MWe Bharat Small Modular Reactor, 55 MWe Small Modular Reactor and High Temperature Gas Cooled Reactor for hydrogen production.

Draft SHANTI Rules, 2026:

Objective and Significance:

• The Draft Rules seek to provide a predictable liability and financial-protection framework for India's expanding nuclear sector.
• The Rules are intended to balance private investment, operator accountability, victim compensation and nuclear safety.
• The framework is particularly important because nuclear accidents involve potentially high-cost and long-duration liabilities that can affect investment decisions for decades.
• The proposed Rules therefore connect operator liability with insurance, financial security, spent-fuel management and decommissioning obligations.

Strict and No-Fault Liability:

• Nuclear installation operators would bear strict liability for nuclear damage, meaning liability can arise without requiring proof of negligence or fault.
• The framework also applies liability principles to nuclear damage arising during the transportation of nuclear material.
• The no-fault approach facilitates compensation by reducing the burden on victims to establish negligence after a nuclear incident.
• Where nuclear damage is attributable to multiple liable operators and cannot be separated, the SHANTI Act provides for joint and several liability, subject to the applicable statutory limits.

Mandatory Financial Protection:

• Operators would be required to maintain insurance, financial security, or a combination of both against nuclear damage.
• Financial security would have to remain irrevocable and continue until all spent fuel is removed from the spent-fuel storage pool after removal from the reactor.
• Where shares, bonds or other financial instruments are used as security, the proposed framework provides for a 1:1.33 security margin.
• Any shortfall in the required financial protection would have to be covered through additional insurance or financial security.
• Such provisions seek to ensure that compensation obligations are backed by actual financial capacity rather than merely being legal liabilities.

Foreign Reactor Technology:

• The draft framework also seeks to establish additional regulatory certainty for the deployment of foreign-designed reactors.
• Foreign reactor technologies would be subject to appropriate certification or regulatory approval requirements linked to the regulatory framework of the country of origin.
• This approach seeks to reduce technological uncertainty while ensuring that imported reactor designs meet appropriate safety and regulatory standards.

Lifecycle Financial Responsibility:

Comprehensive Financial Planning:

• Licensed facilities would need financial arrangements covering civil liability, operating expenditure, spent-fuel management, radioactive-waste management, decommissioning and site remediation.
• This represents a lifecycle approach to nuclear regulation because financial responsibility would extend beyond the period of electricity generation.
• Such planning is important because nuclear facilities can generate financial obligations long after their operational life has ended.
• Dedicated financial provisions for decommissioning and waste management can prevent future liabilities from being transferred disproportionately to taxpayers.

Government-Owned Installations:

• Specified Central Government-owned nuclear installations may be exempted from obtaining insurance or other financial security under the proposed framework.
• In such cases, the Central Government would assume liability for attributable nuclear damage.
• This provision reflects the continuing strategic role of the State in India's nuclear programme even as private participation expands.

Periodic Review of Nuclear Liability:

Five-Year Review Mechanism:

• The proposed framework provides for periodic review of the maximum civil-liability limits.
• An expert group would review these limits every five years, drawing expertise from nuclear science, engineering, actuarial science, insurance, law and public interest.
• Periodic review is important because inflation, reactor capacity, population density, technological change and evolving risk assessments can alter the adequacy of existing liability limits.
• Parliamentary committee discussions have similarly highlighted the need for a structured review mechanism so that statutory liability limits do not become outdated over time.

India’s Nuclear Energy Landscape:

Nuclear Energy and Energy Transition:

• Nuclear energy provides reliable, low-carbon baseload electricity and can complement variable renewable sources such as solar and wind.
• Nuclear power can therefore contribute to India's objectives of energy security, decarbonisation and economic growth.
• India has committed to achieving net-zero carbon emissions by 2070, making the expansion of low-carbon electricity generation strategically important.
• The Government's Nuclear Energy Mission seeks to increase nuclear capacity to 100 GW by 2047 as part of the broader vision of Viksit Bharat.

Current Expansion Strategy:

• India is following a two-pronged nuclear expansion strategy.
• The first component involves deployment of large reactors, including indigenous 700 MWe Pressurised Heavy Water Reactors, along with advanced imported reactor technologies at greenfield sites.
• The second component involves Small Modular Reactors for brownfield applications, captive power, energy-intensive industries and remote or off-grid locations.
• The roadmap envisages around 54 GW of capacity from projects involving the Nuclear Power Corporation of India Limited by 2047, while the remaining capacity is expected to involve public-sector enterprises, State Governments, private companies and joint ventures.

Wider Applications of Nuclear Technology:

Beyond Electricity Generation:

• The SHANTI framework supports the wider use of nuclear technology beyond conventional electricity generation.
• Potential applications include captive power, industrial process heat, hydrogen production, medical isotopes, research, education and training.
• Nuclear captive power can be particularly relevant for hard-to-abate industries such as steel and other energy-intensive sectors.
• Emerging applications may include reliable electricity and process heat for data centres, semiconductor manufacturing, quantum technologies and high-performance computing.
• Such diversification can increase the economic value of India's nuclear technology ecosystem beyond conventional power generation.

SHANTI Act, 2025:

Statutory Framework:

• The SHANTI Act, 2025 provides the statutory foundation for the next phase of India's nuclear-energy programme.
• The Act seeks to enable wider public and private participation while retaining strong government oversight over nuclear safety and security.
• It provides a framework for licensing nuclear installations and activities and establishes responsibilities for nuclear operators.
• The Act seeks to create greater legal and regulatory certainty for investment in the nuclear sector.
• It incorporates provisions concerning civil nuclear liability and compensation for nuclear damage.
• The legislation also provides for mechanisms relating to insurance and financial security for nuclear-liability obligations.
• The Act strengthens the institutional framework for nuclear regulation, including statutory recognition of the Atomic Energy Regulatory Board.
• The framework seeks to balance energy security, climate objectives, public safety, environmental protection and strategic considerations.

Why Private Participation Matters:

Capital and Technology:

• Achieving 100 GW by 2047 requires substantial capital investment and rapid expansion of manufacturing and technological capabilities.
• Greater private participation can supplement public-sector investment and bring additional capital, technology, project-management expertise and supply-chain capacity.
• Private participation can also support the development of domestic nuclear manufacturing and ancillary industries.

Regulatory Challenge:

• Nuclear energy differs from conventional infrastructure because commercial incentives must remain subordinate to nuclear safety and security.
• Private participation therefore requires strong regulation that prevents cost reduction from compromising safety standards.
• The regulatory framework must ensure that operators remain accountable throughout the construction, operation, spent-fuel management and decommissioning lifecycle.

Key Concerns and Issues:

Adequacy of Compensation:

• Liability limits must provide meaningful compensation to victims while remaining financially manageable for operators and insurers.
• If liability limits are too low, victims may remain inadequately compensated after a major accident.
• If liability obligations become excessively high or unpredictable, private investment and insurance availability may be adversely affected.

Private-Sector Risk:

• Nuclear accidents involve potentially low-probability but high-consequence and long-tail risks.
• High insurance premiums and uncertainty regarding future liabilities could discourage private investment.
• A predictable liability regime is therefore essential for creating investment certainty without weakening victim protection.

Moral Hazard:

• Government assumption of liability for specified installations can create a potential moral-hazard problem if operators perceive that the State will ultimately bear the consequences of accidents.
• Strong safety standards, independent oversight and operator accountability are therefore essential.

Radioactive Waste and Decommissioning:

• Spent fuel and radioactive waste management require long-term technical, institutional and financial capacity.
• Decommissioning nuclear facilities can remain a financial obligation for decades after electricity generation ends.
• Lifecycle financial planning is therefore essential to prevent future environmental and fiscal liabilities.

Regulatory Independence:

• Greater private participation increases the importance of an independent, technically capable and adequately resourced nuclear regulator.
• Regulatory decisions should remain based on scientific evidence and safety considerations rather than commercial or political pressures.
• Transparent regulatory procedures can strengthen public confidence in nuclear expansion.

Public Trust and Emergency Preparedness:

• Nuclear expansion requires strong emergency preparedness, environmental safeguards, public communication and disaster-response mechanisms.
• Public trust is particularly important because nuclear accidents can have consequences extending beyond the immediate plant area.
• Parliamentary committee recommendations have emphasised the importance of real-time public alert mechanisms and periodic emergency drills.

Way Forward:

Balancing Investment with Public Protection:

• India should adopt a risk-sensitive nuclear liability regime that provides investor certainty without compromising public protection.
• Liability limits should be clear, predictable and periodically revised using technological, actuarial, economic and safety evidence.
• Insurance and financial-security requirements should remain sufficiently robust to ensure that operators can meet their obligations after an accident.

Strengthening Regulation:

• India should ensure an independent, well-resourced and technically competent nuclear regulatory system.
• Private operators should face transparent eligibility, financial-capacity and technical-competence requirements before receiving licences.
• Continuous regulatory monitoring should be strengthened during the initial years of private-sector participation.

Building a Domestic Nuclear Ecosystem:

• India should develop domestic capabilities in reactor manufacturing, nuclear-grade components, insurance, safety technology, waste management and decommissioning.
• Indigenous Small Modular Reactor development can support technology self-reliance while creating applications for captive power, industrial heat and remote energy supply.
• Research and development should continue across advanced reactors, fuel cycles, nuclear hydrogen and non-power applications.

Ensuring Lifecycle Accountability:

• Nuclear operators should maintain ring-fenced financial arrangements for waste management, spent fuel, decommissioning and site remediation.
• Emergency-response systems should include clear institutional responsibilities, rapid public communication and regular drills.
• Nuclear expansion should follow the principle that commercial participation must not dilute safety accountability.

Conclusion:

• The Draft SHANTI Rules, 2026 represent an important step in translating the SHANTI Act, 2025 into a detailed operational framework for India's expanding nuclear sector.
• The proposed combination of strict no-fault liability, mandatory financial protection, lifecycle financial planning and periodic review seeks to balance investment certainty with public protection.
• The framework is particularly important because India is pursuing 100 GW of nuclear capacity by 2047 while opening greater space for private participation.
• The success of this transition will ultimately depend on whether India can combine rapid capacity addition with uncompromising safety, independent regulation, responsible waste management and credible compensation mechanisms.
• A successful nuclear expansion can strengthen energy security, industrial competitiveness and low-carbon development, but only a robust regulatory architecture can ensure that greater private participation does not weaken public accountability.

Value Addition for UPSC:

Key Concepts:

• Strict Liability: Liability can arise without establishing negligence or fault on the part of the operator.
• No-Fault Liability: Compensation can be claimed without requiring the victim to prove fault or negligence.
• Long-Tail Risk: A risk whose financial or environmental consequences can continue for a long period after the triggering event.
• Moral Hazard: A situation in which protection against losses may reduce incentives to take adequate precautions.
• Lifecycle Liability: The principle that financial and regulatory responsibility extends from construction through operation to waste management and decommissioning.
• Spent Fuel: Nuclear fuel that has been irradiated inside a reactor and subsequently removed from the reactor core.
• Small Modular Reactor: A relatively smaller nuclear reactor designed with modular construction and deployment characteristics, potentially enabling applications beyond conventional large nuclear power plants