India Inc awaits regulatory clarity on nuclear energy following notification of SHANTI Act

New Delhi: India Inc is waiting for the next set of operational steps from the government that will formally open up the nuclear energy sector for private players following notification of the SHANTI Act.

While the new law provides the enabling framework, industry experts said clarity on implementation will determine how quickly investments move from intent to execution, industry executives said "Following the passage of the SHANTI bill, private investors will look for regulatory clarity, policy stability and strong institutional reliability before committing long-term capital," Amit Sharma, MD & CEO, Tata Consulting Engineers, told ET.

Among the immediate requirements is the issuance of rules covering licensing procedures, eligibility criteria, financial security norms, insurance requirements, compensation mechanisms and the framework for a nuclear liability fund, an industry executive, who did not wish to be identified, said.


Detailed safety regulations, inspection mechanisms, authorisation processes and enforcement standards need to be notified under the new statutory framework.

"Clearly defined eligibility and siting criteria, access to an independent and predictable regulatory framework, and a transparent and time bound adjudication process will be important to reduce execution and sovereign risk," Sharma said.

Clarity is also needed on which nuclear activities will be open to private or joint venture participation and which will remain reserved for the government on strategic grounds. Without this demarcation, it is difficult for companies to structure investment plans, one of the persons said

The finalisation of mandatory operator insurance norms and operationalisation of the nuclear liability fund, in consultation with insurers and reinsurers, will be another decisive step.

Standard model licence formats, safety authorisations, contractual clauses on liability and right of recourse are also expected to ease investor concerns. Industry participants say the issuance of a National Nuclear Energy Policy aligned with the National Electricity Policy and long-term baseload planning would further anchor investor confidence.

Credible fuel assurance is equally important, as it supports project bankability, lender confidence and financial closure, according to Sharma.

"Fuel guarantees and assurance are important for funding as well. In case there is a fuel supply issue, whether there will be a government guarantee or compensation will be important while raising funds," an industry official said.

"Detailed rules will provide clarity on the licensing regime, liability, insurance and compensation frameworks, as well as financing and tariff mechanisms. These are critical factors for EPC players and investors before they can draw up detailed project plans," said Debasish Mishra, partner and chief growth officer, Deloitte South Asia.

Notification of model contractual clauses relating to liability, indemnity and right of recourse to facilitate bankable project structures will be needed, the industry official said.