Back in Play: U.S.-India Nuclear Partnership Finds a New Opening

Commentary by Gaurav Sansanwal

Published December 19, 2025

India's new nuclear energy law is New Delhi's most significant step to unlock the promise of nuclear power and finally fulfill the promise of U.S.-India civil nuclear cooperation. The Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act opens India's tightly controlled nuclear power market to private players, while reforming India's liability regime to bring it closer to global norms-as part of a broader national strategy to attract greater investment from key trade partners, and install 100 gigawatts (GW) of nuclear energy by 2047.

Given that prices for renewables plus storage continue to beat new nuclear in most cases, this may not be the nuclear "renaissance" India hopes for. Still, the reform creates some tangible openings for U.S. firms. With supplier liability removed, U.S. companies can now compete in India's market for reactors, fuel services, and R&D partnerships for advanced technologies like small modular reactors-without the liability exposure that previously made India's market untenable.

Overall, while the reform moves the needle, its impact will depend on what comes next: India should further build credible indemnity backstops, clarify existing regulatory ambiguities through coherent rules and bilateral agreements, strengthen regulatory independence, and right-size its 100 GW nuclear target to better reflect economic realities-without crowding out investment in other technologies, including renewables.

From State Monopoly to Market Reform

The new law introduces four structural reforms, setting the stage for effectively remaking the nuclear power market. First, it opens nuclear power generation to private companies and joint ventures, ending the state monopoly over building and operating reactors. Second, the act consolidates and revises the liability regime to provide for a graded liability cap ranging from about $12 million (₹100 crore) to about $360 million (₹3,000 crore), depending on plant size, in alignment with global norms under the Paris and Vienna conventions. Third, the act grants statutory authority to the Atomic Energy Regulatory Board, providing a regulatory structure to the industry. Finally, the act exempts research and development activities from licensing requirements, enabling private companies to innovate and attract foreign investment in advanced nuclear technologies-including small and modular reactors.

Clearing the Liability Hurdle

The toughest impediment to nuclear commerce in India has always been its liability law. Given its refusal to sign the Nuclear Non-Proliferation Treaty, India developed its indigenous nuclear capabilities largely in conditions of international isolation. The 2008 U.S.-India civil nuclear deal was a significant breakthrough, as it enabled India's nuclear trade by permitting imports of nuclear fuel, among other things. But its commercial promise stalled after the 2010 Civil Liability for Nuclear Damage Act diverged significantly from global norms. Unlike the Paris and Vienna conventions on liability, which assigned capped liability solely to the operators-the Indian law introduced a more extensive liability regime that extended to the suppliers. This created legal exposure for foreign equipment vendors, who viewed the risk as commercially unviable, dimming prospects of real cooperation. The Obama administration attempted a workaround in 2015 by creating a Nuclear Liability Insurance Pool, but the mechanism failed to gain traction-largely due to industry concerns over the cost of insurance and continued exposure to liability risk.

The new SHANTI Act addresses this by effectively eliminating supplier liability. Under the previous law, plant operators could recover compensation from suppliers in the event of an accident. This explicit right to supplier recourse has been taken away under Section 16 of the new act, except in cases where such a right is expressly provided for in a supplier-operator contract. While operators now bear exclusive liability, that too has been circumscribed in a graded manner, ranging from roughly $12 million (₹100 crore) to roughly $360 million (₹3,000 crore). While these changes are likely to ease industry concerns, the liability caps may be inadequate to cover damages in cases of catastrophic nuclear accidents. As such, the government should look to establish a dedicated Nuclear Liability Fund that can cover exceedances. Committing fiscal resources toward such an "indemnity backstop" will help not only provide more contractual and legal certainty but also boost the overall confidence of both consumers as well as investors. Resolving such ambiguities through a bilateral agreement is another pathway for the United States, especially given that U.S. companies would be competing with state-backed Russian and French enterprises for more investment in the Indian market.

Barriers Removed, but Discretion Remains

While the new act's elevation of the Atomic Energy Regulatory Board is a welcome step, its operational autonomy needs to be strengthened. Distancing government from the tariff regulation process will be critical-a suggestion that was made by the Central Electricity Authority but not accepted in the legislation. Framing rules that firm up regulatory independence from executive discretion in operator licensing and tariff-setting decisions will help maintain a level playing field between domestic and foreign investors.

The 100 GW Question: Is the Promise of Nuclear Energy Real?

India's plan to grow nuclear capacity from around 8 GW today to 100 GW by 2047 is ambitious-especially given that, on cost, pace, and scale of deployment, nuclear remains firmly behind renewable energy, which has already crossed 250 GW in installed capacity. Analysis by the University of California, Berkeley, suggests that recent solar and storage auctions in India have discovered prices between ¢34 and ¢39 (₹3.1 and ₹3.5 per kilowatt hour, or kWh). By contrast, India's Central Electricity Authority finds the levelized tariff of nuclear reactors to be over ¢67 approximately (₹6 per kWh). Additionally, given the high capital costs and long gestation periods for projects, financing risk also remains a big constraint for advancing nuclear energy in India.

India's nuclear plans should also contend with global realities. In the United States, nuclear energy stands at an inflection point, having largely been stagnant past few decades due to regulatory delays, financing issues, and some public distrust. As such, what happens with U.S. participation in India's nuclear future may ultimately depend on whether the U.S. industry sees new life at home, in light of some recent momentum.

While nuclear's role in India's energy mix can rise from a low base, it is unlikely to be the workhorse of India's energy transition goals. In this context, right-sizing the 100 GW target will send appropriate market signals and help avoid cannibalizing capital flows needed for faster-deploying, lower-cost renewable energy plus storage projects. Commissioning more independent modeling studies could help inform a more balanced plan that ensures India's energy security and energy transition goals are met without over-reliance on any single technology choice.

Taking It Home: Shaping Market Signals

Seventeen years after the U.S.-India nuclear agreement, New Delhi has finally broken the policy inertia with a big legal reset. It's a meaningful move-but delivering results will require India to follow through with clear rules, stronger regulatory independence, and targets grounded in economic reality. The ongoing U.S.-India trade negotiations offer a timely opportunity to translate this legal reform into real commercial gains for both sides.

Gaurav Sansanwal is a fellow for the Chair on India and Emerging Asia Economics at the Center for Strategic and International Studies in Washington, D.C.

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