Answer

India’s nuclear energy sector, governed by the Atomic Energy Act (AEA) 1962 and the Civil Liability for Nuclear Damage Act (CLNDA) 2010, plays a pivotal role in the country’s clean energy transition. Although these acts ensure safety, liability, and related development, they also shape investment dynamics and operational frameworks.

Advantages of India’s Nuclear Liability and Atomic Energy Acts

Civil Liability for Nuclear Damage Act, 2010

• Clear Compensation Framework: The Act imposes strict no-fault liability on plant operators up to ₹1,500 crore, ensuring prompt remediation.
  Eg: Operators hold insurance; the government covers excess up to 300 million Special Drawing Rights ( SDR ), offering compensation certainty.
• Victim Protection: Establishes a fast-track mechanism for victims to claim and receive compensation without lengthy litigation.
  Eg: Rules mandate filing within 10 years and show cause within 7 days, ensuring timely resolution.
• Encourages Operator Responsibility: By enforcing liability, the Act incentivizes high safety standards and operational due diligence.
  Eg: Nuclear Power Corporation of India Limited (NPCIL), India’s operator, maintains robust risk management to minimize liability and foster public trust.

Atomic Energy Act, 1962

• Centralised Regulatory Control: Empowers the Department of Atomic Energy (DAE) to regulate atomic energy, ensuring consistent safety and security protocols.
  Eg: All nuclear projects are managed by NPCIL/Bharatiya Nabhikiya Vidyut Nigam Limited (BHAVINI) streamlining compliance and oversight.
• Uranium Resource Rulation: Rulates uranium and thorium mining and processing, ensuring secure and sustainable resource use.
• Controlled Expansion via PSUs: Permits Joint Ventures (JVs) between PSUs under DAE, enabling expansion via entities like Anushakti Vidhyut Nigam/ASHVINI.
  Eg: The 2016 JV model with NTPC Limited allowed collaborative reactor deployment, demonstrating structured growth.

Limitations Hindering Foreign Investment & Private Participation

Attracting Foreign Investment

• Supplier Liability Concerns: Operator’s right to recourse against suppliers under Section 17 of CLNDA deters foreign firms wary of open liability.
  Eg: EDF’s Jaitapur project stalled due to unresolved supplier risk concerns under the 2010 Act.
• FDI Restrictions Under Atomic Act: The AEA,1962 bars foreign or private ownership in nuclear plants, restricting foreign direct investment.
  Eg: NPCIL-led generation keeps foreign firms restricted to supply roles only.
• Regulatory Uncertainty: Mixed signals on amendments and cross-border liability clauses create an opaque investment climate.

Private Sector Participation

• Operational Limitations: Even PSUs JVs prohibit full private control, relating private entities to service roles only.
  Eg: The 2024 “Bharat Small Reactor” proposal limits private firms to land and construction, NPCIL retains ownership and operation.
• Lack of Investment Incentives: Absence of private equity stake discourages capital inflow, limiting innovation and scale.
  Eg: Budget 2025 proposes up to 49% FDI, but phased rollout may delay private backing.
• Tariff and Return Clarity Missing: Unclear profit frameworks and rate-setting under Section 22 of CLNDA  hinder private firm engagement.
  Eg: Industry experts demand defined tariff norms and cost recovery models before committing 

Way Forward

• Amend Liability Caps: Limit supplier liability to contract value with time-bound claims to align with international standards.
• Introduce FDI Options: Allow up to 49% FDI, as proposed in Budget 2025, in phased tranches to balance investor confidence and sovereignty.
• Enable Private Equity Participation: Permit private equity stakes and JV operational roles under strict regulatory oversight.
• Clarify Tariff Framework: Define clear, transparent tariff norms with DAE and Central Electricity Authority consultation.
• Streamline Private Models: Build on “Bharat Small Reactor” models with clearer private roles post-construction and operational involvement.

While India’s Civil Liability and Atomic Energy Acts ensure nuclear safety and structured governance, their restrictive frameworks limit private and foreign investment. Swiftly amending liability norms, enabling FDI, clarifying tariffs, and empowering

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