SHANTI Act and Nuclear Liability Reforms Debate: Key Issues, Impact and Analysis

Contex

• The SHANTI Act, passed in the Winter Session of Parliament have raised concerns about safety and accountability due to changes in supplier indemnity and liability caps

Significance of the Act

• Attracting Foreign Investment: By aligning liability norms with global supplier-friendly standards, the Act may attract multinational firms, especially from the U.S. and Europe.
• Energy Security Ambitions: The Act supports India’s long-term goal of expanding nuclear capacity under its three-stage programme and reducing dependence on fossil fuels.

Issues in the SHANTI Act

• Moral Hazard Due to Liability Caps: Capping liability may reduce incentives for operators to invest in maximum safety standards.
• Supplier Indemnity Despite Global Precedents: Major accidents such as Chernobyl disaster and Three Mile Island accident involved design or system flaws. Shielding suppliers from accountability may undermine safety culture.
• Low Compensation: Studies estimate Fukushima’s economic damage at tens of lakh crore rupees. India’s cap (₹3,900 crore) would cover only a fraction of potential losses, leaving victims inadequately compensated.
  • Further Omission of Clause 46 of CLNDA restricts legal recourse options for victims.
• Regulatory Independence Concerns: The AERB’s appointment process remains closely tied to the Atomic Energy Commission, potentially compromising its autonomy in enforcing strict safety standards.
• Limited Role of Nuclear in India’s Energy Mix: Nuclear power contributes only about 3% of India’s electricity. Past targets (10 GW by 2000, 20 GW by 2020) were missed due to high capital costs, delays, and safety concerns, raising doubts about ambitious future targets like 100 GW by 2047.
• High Capital and Financial Risks: Projects like the Westinghouse AP1000 reactors in the U.S. have shown massive cost overruns. Without strong oversight, similar risks could burden Indian taxpayers.

Way Forward

• Strengthening Regulatory Independence: The AERB must be made fully autonomous, with transparent appointments and parliamentary oversight to ensure credible safety enforcement.
• Revisiting Liability Caps: India could consider periodic revision of liability caps indexed to inflation and plant capacity, ensuring realistic compensation.
• Mandatory Insurance and Risk Pooling: Operators should maintain robust insurance coverage and participate in international compensation frameworks for additional security.
• Ensuring Supplier Accountability: Even if indemnified from civil liability, suppliers should be accountable under strict contractual and criminal provisions for proven negligence or defective design.
• Public Transparency and Safety Audits: Regular safety audits, public disclosure of risk assessments, and independent review mechanisms can build confidence in nuclear expansion.
• Diversified Energy Strategy: Nuclear energy should complement, not replace, renewables and storage solutions. A balanced mix reduces overdependence on any single technology.

For nuclear energy to truly strengthen India’s long-term energy security, reforms must balance commercial incentives with robust regulatory safeguards and adequate protection for citizens

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