Nuclear Liability Caps to Get 5-Year Review Under SHANTI Act Rules

India’s new nuclear liability framework will introduce a five-year review mechanism for operator liability caps under the SHANTI Act, according to draft rules released by the Department of Atomic Energy.

The proposed review will allow an expert group to assess whether the graded liability limits remain appropriate and recommend changes.

The move comes as India opens its civil nuclear sector to greater private participation and seeks to expand nuclear power capacity.

Highlights:

• The expert group will include specialists in nuclear science and engineering, actuarial science, insurance and law, along with public-interest representatives.
• The new graded liability structure links an operator’s maximum liability to the capacity of a nuclear installation, replacing the earlier flat Rs 1,500 crore cap.

How Will the New Liability Review Work?

Rule 78 of the draft SHANTI Act rules provides for the Centre to constitute an expert group to review the “maximum limits of operator’s civil liability for nuclear damage”.

The group will examine the limits and recommend amendments to the Act’s Second Schedule. The review is proposed every five years, creating a defined mechanism for reassessing liability as India’s nuclear industry develops.

The SHANTI Act has replaced the earlier flat liability structure under the Civil Liability for Nuclear Damage Act, 2010 (CLNDA) with graded caps based on the capacity of a nuclear installation.

Operators of reactors above 3,600 megawatt-electric (MWe) will face a maximum liability of Rs 3,000 crore. The cap is Rs 1,500 crore for reactors between 1,500 MWe and 3,600 MWe.

For reactors between 750 MWe and 1,500 MWe, the limit is Rs 750 crore. It falls to Rs 300 crore for reactors between 150 MWe and 750 MWe. For reactors up to 150 MWe, certain fuel-cycle facilities and transportation of nuclear material, the liability is capped at Rs 100 crore.

The review mechanism builds on the CLNDA, which also allowed the Centre to periodically review operator liability. However, the draft SHANTI rules provide a specific five-year framework for expert assessment and recommendations.

Why Is Nuclear Liability Under Scrutiny?

The proposed review comes as nuclear liability remains a key issue following the SHANTI Act’s opening of India’s tightly regulated nuclear sector to private players.

The Supreme Court is also examining a challenge to the liability provisions. The petition has questioned the law’s provisions allowing private and foreign companies to operate nuclear power plants while limiting operator liability and excluding suppliers from certain liabilities.

The Supreme Court has asked the Centre whether the SHANTI Act would prevent constitutional courts from determining “fair and just” monetary compensation following a nuclear accident.

Another significant change involves the operator’s right of recourse against nuclear equipment suppliers.

Under Section 17 of the CLNDA, operators could seek recourse against suppliers when an accident resulted from defective equipment, sub-standard services or certain acts or omissions. The SHANTI Act retains provisions allowing recourse where it is specifically included in a written contract or where an incident results from an intentional act.

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However, it removes the earlier provision covering accidents caused by supplier defects or sub-standard services.

The change has been significant for international nuclear equipment suppliers, who had previously raised concerns about potentially long-term and uncertain liability exposure in India.

For the government, the revised framework is intended to create greater clarity around nuclear liability while supporting investment in the sector. The five-year review mechanism could also allow liability caps to evolve as India’s nuclear industry, technology and risk environment change.

The balance between operator accountability, supplier participation and investor confidence is likely to remain central as India moves towards expanding nuclear power and bringing new participants into the sector.