The Fuel Question: What the SHANTI Act Does Not Solve

The Lift Line

India can be sold a reactor. Whether it can be sold fifty years of fuel is a different negotiation, and nobody has had it yet.

Why This Editorial Matters for Your Exam

This is the answer to a question candidates get wrong every year: why did the 2008 civil nuclear agreement not produce reactors? The usual answer, liability law, is now partly obsolete because the law has changed. This piece supplies the deeper answer, and it connects three separate syllabus areas, energy security, non-proliferation and India’s reactor technology, into one argument. It is the counterpart to the financing side of the same debate, and both read against our article on the SHANTI Rules consultation.

GS Paper 3: Infrastructure and energy; awareness in the field of nuclear technology; indigenisation of technology. GS Paper 2: Bilateral agreements involving India; effect of policies of developed countries on India’s interests.

Background and Context

What has changed. India has enacted the SHANTI Act, 2025, which caps the liability of nuclear power system developers and, critically, removes the automatic liability of equipment suppliers. Supporters of nuclear expansion had long blamed the Civil Liability for Nuclear Damage Act, 2010 for deterring foreign entrants. The change matters because, as the author notes, the operator could be Indian while the equipment comes from abroad.

Why that may not be enough. The NITI Aayog net-zero study projected that a cost-effective greener pathway would require about 100 GW of nuclear power by 2047, more than a tenfold increase from current capacity. Reaching it means importing reactors, and importing reactors raises a question liability law does not touch.

The historical warning. India opened its sector to international collaboration under the civil nuclear agreement with the United States in 2008, concluded under Section 123 of the United States Atomic Energy Act and commonly called the 123 Agreement. The author’s assessment is blunt: it was a period of hope, but few global partnerships materialised. Russia is the notable exception, and work on Kudankulam predates that agreement.

The Analysis

1. India’s reactor choice is the root of the exposure, and it was a deliberate choice. The domestic programme was built in three stages: natural uranium in PHWRs, then plutonium in fast breeder reactors, then thorium. Natural uranium can be used directly in a heavy water reactor, so India never needed enrichment. Most of the world uses light water reactors, which need low-enriched uranium. India therefore lacks the enrichment capacity that imported reactors would require, and the sixty-year logic of self-reliance is precisely what now creates dependence at the point of scaling.

2. Enrichment is dual-use, and that is why it is not simply purchased. Enrich a little and you have LEU usable in a light water reactor; enrich much further and the same cascade produces weapons material. That single technical fact explains why supplier states attach conditions, why safeguards exist, and why India cannot resolve its fuel problem by ordering a plant.

3. The author’s list of the real risks is worth reproducing. Beyond accidents, the risks that have actually destroyed nuclear projects globally run from cost overruns to never getting built. Finance, he argues, is the easiest to scope: is the supplier bringing capital, at what rate, in rupees or foreign currency, and is the project structured as a fixed rupee-per-unit power sale or as a capital-expenditure play that leaves operations as an open risk? Those are answerable questions. Fuel over fifty years is not.

4. The commercial parties inherit the problem. Tata, Adani and NTPC have expressed interest. Any contract they sign has to build in assured fuel supply and an answer on spent fuel take-back, not merely the hardware. A private balance sheet cannot absorb a fuel interruption caused by a change of government in a supplier state.

5. The constructive proposal is a package, not a purchase. India, the author argues, is in a position to ask not just for fuel but for LEU production facilities as part of a package deal, and can ameliorate global concerns by placing such facilities and the linked reactors open to external inspections. This takes time, so LEU can be imported initially. Beyond that, thorium-based fuel cycles, in which India is unusually well endowed, would address fuel security and reduce the spent fuel problem at the same time.

The precision that earns marks. India is not a party to the Non-Proliferation Treaty, yet it trades in civil nuclear technology. The mechanism is the India-specific safeguards agreement with the International Atomic Energy Agency and the 2008 waiver from the Nuclear Suppliers Group, which together permit civil nuclear commerce with a separated civilian programme. An answer that treats India as a treaty member, or that omits the NSG waiver, has misdescribed the legal basis of the entire arrangement.

Data and Institutions Vault

Prelims-grade facts:

The law and the target:

• The SHANTI Act, 2025 caps liability for nuclear power system developers and removes automatic liability for equipment suppliers.
• It replaces the framework previously governed by the Atomic Energy Act, 1962 and the Civil Liability for Nuclear Damage Act, 2010.
• The NITI Aayog net-zero study projected a requirement of about 100 GW of nuclear power by 2047.
• That is more than a tenfold increase on present capacity.

The technology:

• India’s three-stage programme runs from natural uranium in Pressurised Heavy Water Reactors, to plutonium in fast breeder reactors, to thorium.
• Heavy water, or deuterium oxide, is the moderator that allows natural uranium to sustain a chain reaction.
• Light water reactors require low-enriched uranium, generally below 20 per cent uranium-235.
• India lacks enrichment facilities at the scale that imported light water reactors would require.
• Enrichment is dual-use: the same technology at higher levels produces weapons-grade material.
• India holds among the world’s largest thorium reserves, concentrated in monazite sands along the southern coast.

The international framework:

• The civil nuclear agreement with the United States was signed in 2008 under Section 123 of the United States Atomic Energy Act.
• India is not a signatory to the Non-Proliferation Treaty.
• India operates under an India-specific safeguards agreement with the International Atomic Energy Agency covering its separated civilian facilities.
• The Nuclear Suppliers Group granted India a waiver in 2008 permitting civil nuclear commerce.
• India is a member of the Missile Technology Control Regime, the Wassenaar Arrangement and the Australia Group, but not of the Nuclear Suppliers Group.
• Kudankulam, built with Russian collaboration, predates the 2008 agreement.

The commercial interest:

• Tata, Adani and NTPC have expressed interest in nuclear power.
• The author is Rahul Tongia, senior fellow at the Centre for Social and Economic Progress.

⚠️ Watch the trap: India is a member of three of the four multilateral export control regimes but not of the Nuclear Suppliers Group, where consensus has not been reached. Its civil nuclear trade rests on the 2008 NSG waiver rather than on membership. This distinction is examined regularly and answered wrongly just as regularly.

The Debate

Fuel is the binding constraint. A reactor with no assured fuel is a stranded asset with a fifty-year exposure. Contracts can promise supply, but no contract survives a supplier government that decides otherwise, and the buyer’s leverage is greatest before the capital is committed, not after.

Finance is the binding constraint. The other half of this debate argues that the fuel question is only reached if plants are built, and that at roughly 1 lakh crore rupees a year for two decades, the financing architecture does not yet exist. Fuel risk is real but second-order.

The reconciliation. The two constraints bind at different moments, and an answer that says so is stronger than one that picks a side. Financing determines whether construction starts; fuel security determines whether the asset performs across its life. The practical implication is about sequencing: fuel terms negotiated after capital is committed are negotiated from the weaker position, so the package must be assembled before the order is placed, even though the financing question arrives first in time.

How to Think About This

Separate a capability from a contract. A contract to supply fuel is a promise, enforceable in commercial terms and unenforceable in political ones. A facility on Indian soil that produces fuel is a capability, and it survives changes of government abroad. The author’s package proposal is an attempt to convert a contract into a capability, and the price of that conversion is external inspection. That trade, sovereignty over a facility in exchange for security of supply, is the actual decision in front of India, and it is the shape of an answer that goes beyond description.

Diagram-in-Words

Takeaway Box

• Liability was a barrier; fuel is the exposure. The SHANTI Act removes the first and does not touch the second.
• PHWR means no enrichment, and no enrichment means imported reactors cannot be fuelled domestically. State that chain in one sentence.
• Enrichment is dual-use, which is why fuel supply is a diplomatic question rather than a procurement one.
• 2008 opened the door and few walked through it. Russia and Kudankulam, which predates the agreement, are the exception that proves the point.
• Ask for the facility, not just the fuel, and expect to pay in external inspection. That is the trade the author is proposing.

Sources: Hindustan Times

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