India’s SHANTI Act shifts nuclear risks from suppliers to the state, clearing space for modular reactors, private partners, and a bigger role for atomic energy
India’s Ministry of Power released a draft energy strategy this week that seeks to transform the country’s power sector in line with its broader development agenda and the nuclear goals set out in the recently enacted Nuclear Energy for Transforming India Act (SHANTI), passed in December 2025.
The new policy identifies nuclear power as a “clean, reliable, and sustainable energy source with significant potential for India’s long-term energy security.” To expand nuclear capacity to 100 GW by 2047, “the Central Government will collaborate with the private sector for setting up modular reactors, developing Bharat Small Reactors, and advancing next-generation nuclear technologies.”
For much of the post-Cold War period, nuclear energy remained paradoxically out of reach for much of the Global South, even as demand for reliable baseload power surged across Asia and Africa. Nuclear power was constrained not just by cost and technology, but by liability regimes, insurance structures, and financing models designed around advanced economies with deep capital markets, leaving few workable options for developing countries. India’s SHANTI Act quietly shifts this landscape by recalibrating liability norms, enabling scalable reactor technologies, and reinforcing cooperation with longstanding partners.
Nuclear liability and access in the Global South
One of the most persistent obstacles to nuclear deployment in developing countries has been liability exposure, exemplified by India’s earlier framework under the Atomic Energy Act of 1962 and the Civil Liability for Nuclear Damage Act of 2010, where statutory supplier liability in the 2010 law deterred most global vendors and investors.
The SHANTI Act decisively alters this equation. By repealing earlier laws and aligning India’s liability framework with the Convention on Supplementary Compensation for Nuclear Damage (CSC), SHANTI shifts supplier liability from statute to contract and introduces a graded, capacity‑linked cap on operator liability, with any residual liability beyond these caps resting with the state as sovereign backstop.
Section 13 caps operator liability at 300 million Special Drawing Rights (SDRs), equal to around $430 million (SDR is an international reserve asset maintained by the IMF to help supplement countries’ official reserves). Liability beyond 300 million SDRs is assumed by the Center. This move creates a clearer and more predictable framework for investors and partners.
This recalibration matters because many developing countries lack deep insurance markets or strong courts for complex nuclear disputes. In India, for example, the nuclear insurance pool is only about $163 million and already needs government backing, highlighting limited private nuclear‑risk capacity, while studies on developing‑country insurance sectors show undercapitalized insurers and thin catastrophe reinsurance, making nuclear cover structurally fragile.
In this context, SHANTI removes broad, open‑ended statutory recourse against suppliers, retaining it only for contractual and intentional‑damage cases, which legal analyses argue makes liability clearer and more insurable. By normalizing its regime, India ceases to be an exception within global nuclear governance and develops a legal template that can be adapted with developing countries considering nuclear baseload.
For Bangladesh, Ghana, and Vietnam, which have explored nuclear options but struggled with financing and sovereign‑guarantee constraints, SHANTI demonstrates that nuclear power can be pursued under globally aligned yet development‑sensitive rules.
At the same time, SHANTI does not eliminate risk; it reallocates it. Capping operator liability at 300 million SDR and placing residual responsibility on the sovereign means that, in a catastrophic event, taxpayers would shoulder much of the burden rather than suppliers or insurers, while accidents such as Fukushima have generated clean‑up and compensation bills in the hundreds of billions of dollars.
The test for SHANTI will be whether India can deepen its liability fund, strengthen regulation, and raise contractual safety standards, making extreme events less likely even as investment becomes more bankable, so that the Act becomes the opening move in a sequenced reform of India’s nuclear sector rather than an endpoint.
SMRs and the economics of scale
Beyond legal reform, the Global South’s nuclear dilemma is rooted in scale. Electricity demand in emerging economies is rising rapidly, while grid capacity, storage infrastructure, and public finance lag behind. The IEA estimates that 85% of the increase in global electricity demand over the next three years will come from emerging and developing economies, underscoring how quickly power needs are growing outside the OECD.
Large, gigawatt‑scale nuclear reactors, common in advanced economies, often prove ill‑suited to these conditions. Typical large reactors are designed as roughly 1,000 MW units that take around 10-15 years to build from initial construction to operation. The capital costs of these projects is around $15-28 billion per GW, judging from recent projects.
By contrast, the example of Russia’s Akademik Lomonosov floating plant, which features a pair of 35 MW small modular reactors (SMRs) built for around 37 billion rubles ($488 million) shows how smaller reactors can serve remote, weaker grids typical of many Global South industrial and mining regions more flexibly than single gigawatt‑scale units.
India’s nuclear strategy under SHANTI explicitly recognizes this mismatch, and the opportunity.
Recent interpretations of the IEA’s outlook suggest India’s electricity demand will grow at over 4% per year through 2050, making it the third‑largest electricity consumer by mid‑century and requiring about $1.2-1.6 trillion in power‑sector investment. Detailed modeling shows total demand could rise from 1,210 TWh in 2019 to 5,246 TWh by 2050, while peak demand reaches 700-750 GW in low‑carbon scenarios, levels impossible to serve with variable renewables alone without massive storage and grid overbuilding.
Meeting this demand requires not only more reactors, but more adaptable ones. A systems study finds India could build 168-328 GW of nuclear by 2050, with advanced and SMRs supplying 13-28% of total demand and up to 28% of power in some cases, acting as firm, low‑carbon baseload that complements solar and wind. This aligns with India’s roadmap to 100 GW of nuclear by 2047 and public funding for at least five domestically designed SMRs by 2033, backed by a federal budget for 2025-2026 which allocated around $2.1 billion to accelerate SMR deployment in the country.
The IAEA notes that SMRs suit countries with smaller grids and limited finance, and India’s designs from BARC and NPCIL aim to leverage fleet‑based standardization, reframing nuclear for the Global South as scalable and phased rather than monolithic.
India-Russia cooperation for capacity building
While SHANTI is an Indian statute, its international relevance is inseparable from India’s nuclear partnerships, most notably with Russia. Historically, Russia has been the only external actor able to operate within India’s earlier liability and regulatory constraints, as demonstrated by the Kudankulam Nuclear Power Plant, where Rosatom supplied VVER technology under a long‑term cooperation framework with the Department of Atomic Energy and NPCIL.
Speaking at the India Energy Week conference that took place in Goa this week, Egor Kvyatkovsky, the director-general of Rosatom International Network, hailed the SHANTI Act and noted that coupled with the government’s ‘Make in India’ strategy, it provides more opportunities for localization in the nuclear energy sector.
Under SHANTI, the existing cooperation between India and Russia acquires a broader developmental dimension. Russia’s export model, state‑backed financing, long‑term fuel‑supply contracts and full lifecycle support, already underpins several Global South projects, including Bangladesh’s Rooppur Nuclear Power Plant, where Rosatom provides EPC services, fuel, training, and assistance to the national operator and regulator.
India complements this model through regulatory credibility and human capital. Under its India‑specific safeguards agreement with the IAEA, New Delhi has offered 35 civilian facilities, including 14 power reactors, fuel‑cycle plants and research centers, for international inspection, significantly expanding the number of Indian units under IAEA safeguards and reinforcing confidence in its regulatory regime.
Decades of operating pressurized heavy-water reactors and imported light‑water reactors have created a large pool of engineers and technicians experienced in nuclear construction, operations and maintenance. This expertise is now being exported. In 2024, Emirates Nuclear Energy Company and NPCIL signed a memorandum of understanding on O&M cooperation for the UAE’s Barakah plant, establishing a formal framework for sharing operation and maintenance know‑how, safety practices, and human‑resource development.
SHANTI allows India to institutionalize these engagements by permitting licensed nuclear activities through private and joint-venture entities under state supervision, expanding India’s role in overseas projects, from component manufacturing to training and regulatory advisory work. However, the real test is whether India can capitalize on these mechanisms, tighten oversight, and deploy SMRs and large units without major incidents.