Opening India’s Nuclear Sector: Regulation Must Lead Market Entry
India’s nuclear expansion will succeed only if efficiency is disciplined by strong, independent regulation
A background note can be accessed here: SHANTI Bill 2025 – Private Participation in India's Nuclear Sector
Pankaj Jha: Co-Founder, Eval360 Research
SDG 7: Affordable and Clean Energy | SDG 9: Industry, Innovation and Infrastructure
Department of Atomic Energy | Ministry of Power
The Bill repeals legacy provisions and allows private and non-government entities to build, own, and operate nuclear power plants – a departure from India’s state-exclusive model. What governance risks and opportunities arise from opening up civil nuclear energy to private participation?
Opening civil nuclear energy to private participation introduces a structural tension between commercial efficiency and strategic control. Profit-oriented firms may push aggressive cost optimisation, narrowing the margin between efficiency and compromised safety unless compliance is enforced rigorously. The challenge is not regulation per se, but how it is designed – oversight must be stringent yet insulated from regulatory capture through transparent procedures, technical capacity, and enforcement credibility.
Strategic risks also arise from increased handling points for fissile material as more operators enter the system, raising proliferation and security concerns. Private players therefore require sustained sensitisation to nuclear security norms, alongside clear and enforceable consequences for breaches. Dependence on proprietary foreign reactor technologies further risks constraining long-term programme autonomy.
The opportunities too are substantial. Private firms bring superior project management capabilities, reducing chronic delays and lowering the levelised cost of energy. Corporate balance sheets and private equity can bridge India’s nuclear financing gap, freeing public resources for grid infrastructure and R&D. Competition can also accelerate adoption of advanced safety systems and modular construction techniques that the earlier state monopoly was slow to internalise at scale.
By easing liability and regulatory constraints, the Bill potentially lowers entry barriers for foreign, particularly US, nuclear suppliers at a time of ongoing trade negotiations and tariff pressures. Is facilitating nuclear market access a strategic bargain India should strike in this context, and what are the longer-term implications for energy security, regulatory autonomy, and bargaining power?
Facilitating foreign, particularly US, nuclear supplier entry through eased liability and regulatory constraints can be a defensible strategic bargain, provided the state plays the role of a vigilant referee. The long-term energy logic is compelling: with coal being phased down and renewables remaining intermittent, nuclear power is India’s only scalable, zero-carbon baseload option. Without private and foreign participation, meeting India’s 2070 climate and energy targets becomes improbable.
The recalibration of liability caps increases India’s bargaining power rather than diminishes it. By lowering entry risks, the state can credibly demand technology transfer, domestic manufacturing, and integration with “Make in India” as conditions for market access.
The pressure point lies in regulatory autonomy. Granting statutory status to the Atomic Energy Regulatory Board (AERB) and separating it from the Atomic Energy Commission (AEC) is pivotal. If the AERB is under-resourced or politically constrained, large foreign vendors and domestic conglomerates could dominate oversight. The success of this bargain ultimately hinges on whether regulatory independence is substantive, not merely formal.
The SHANTI Bill introduces a no-fault liability regime with operator liability caps linked to reactor capacity, backed by a government-managed Nuclear Liability Fund beyond those limits. Does this combination of capped private liability and public backstopping create systemic policy blind spots that policymakers should explicitly address?
The SHANTI Bill’s liability architecture – capped operator liability, zero supplier liability, and a government-backed Nuclear Liability Fund – effectively socialises catastrophic risk while privatising near-term returns. When private operators face limited downside, extreme events tend to be treated as financial write-offs rather than existential threats, weakening incentives to invest in mitigation for low-probability, high-impact “black swan” scenarios.
A major blind spot concerns decommissioning. Nuclear plants operate for 60 years or more, while private firms may merge, dissolve, or exit far earlier. If an operator ceases to exist decades before decommissioning or waste storage obligations arise, the fiscal burden inevitably shifts to the state.
This risk can be corrected through mandatory, ring-fenced Decommissioning Trust Funds, funded annually by operators and legally insulated from corporate balance sheets. Additionally, removing supplier liability – long demanded by US and French vendors – means design faults originating abroad would still impose costs on Indian operators and taxpayers. The Bill’s ambition is justified, but its success rests squarely on robust institutional safeguards and a genuinely independent AERB.
Author:
Views are personal.