Whalesbook
SHANTI Act Overhauls Nuclear Liability
The recent enactment of India's SHANTI Act marks a significant shift for nuclear investment. This law, passed in December 2025, overhauls the nation's nuclear liability rules to attract global players. It replaces the 2010 Civil Liability for Nuclear Damage (CNLD) Act, which placed heavy burdens on suppliers. The SHANTI Act now directs liability mainly to the operator and caps supplier exposure. This change, along with allowing up to 49% foreign direct investment in nuclear projects, significantly reduces risk for foreign companies and investors, making India a more appealing market.
Focus on Small Modular Reactors (SMRs)
Small Modular Reactors (SMRs) are a major focus for India and the US delegation. SMRs offer greater flexibility and potential cost savings, positioning them as key to future nuclear power. India's goal of 100 GW nuclear capacity by 2047 relies on advanced technologies like SMRs to meet energy demands and decarbonization targets. The SHANTI Act is set to accelerate SMR development and technology sharing. The global nuclear market is growing, with Asia-Pacific expected to be a significant hub for both large reactors and SMRs.
Key Players and Market Position
This policy shift creates significant opportunities for major Indian companies. Larsen & Toubro (L&T), a leading engineering firm (₹5.42 trillion market cap, P/E ~33.6), is already manufacturing key reactor components. Adani Enterprises (market cap ~₹3.5 trillion, P/E 32.7-35.9) is also expanding its role in energy infrastructure. Companies like Bharat Heavy Electricals Limited (BHEL) are vital for India's nuclear growth. The current valuations of L&T and Adani reflect investor optimism in India's industrial future, even if they trade at a premium.
Challenges Remain Despite Reforms
Despite reforms, significant challenges remain for implementation. Turning policy into actual projects depends heavily on efficient execution, regulatory speed, stronger institutional capabilities, and clear financing plans. Nuclear power faces tough competition from cheaper solar and wind energy. Long construction times also add to execution risks. While the SHANTI Act aligns with international liability norms, maintaining public trust will require strong safety oversight and dispute resolution. Geopolitical issues, such as India's past exclusion from the Nuclear Suppliers Group (NSG), also present complexities.
India's Ambitious Nuclear Future
India aims for 100 GW of nuclear power by 2047, a substantial leap from its current ~9 GW. The SHANTI Act is a crucial enabler for securing the private and foreign capital needed for this expansion. As global energy security and net-zero targets gain urgency, nuclear energy is seeing renewed global interest as a reliable, low-carbon option. India's legislative reforms and focus on SMRs position it to be a major participant in the future of nuclear energy.