Nuclear Supplier and Vendor Liability in India 2026: What the CLNDA Amendment and Private-Sector Entry Mean for Insurability

For a company that supplies a reactor pressure vessel, a steam generator, control-system software or turnkey construction services to an Indian nuclear installation, liability does not arrive through the same door as it does for the operator. The operator carries strict, no-fault liability for third-party nuclear damage and channels that exposure into a first-party property and business-interruption programme plus a statutory operator liability cover. A vendor sits one step removed, exposed instead through the operator's right of recourse: the mechanism by which an operator who has paid compensation can turn around and recover that sum from the party whose equipment or service caused the incident.

That recourse exposure is a distinct insurable interest. It is not covered by the operator's own liability policy, and it is usually excluded or heavily sub-limited under an ordinary commercial general liability or product liability wording because of the nuclear exclusion that sits in almost every standard market form. A supplier who assumes it is covered under its existing manufacturing liability programme is almost always wrong.

The practical result is that a nuclear supplier needs a purpose-built cover that responds to a recourse claim, sits behind the operator's payment, and matches both the value and the duration of the underlying supply contract. Before the 2025 reforms this exposure was defined almost entirely by statute. After them it is defined largely by contract, which changes what a broker has to read before placing anything. Understanding the difference between the operator channel and the supplier channel is the first thing a risk manager on either side of a nuclear supply agreement has to get right, because the two are priced, capitalised and worded on completely different bases.

The old regime under the Civil Liability for Nuclear Damage Act, 2010 gave operators three routes of recourse against suppliers. Section 17(a) allowed recourse where a written contract expressly provided for it. Section 17(b) created a statutory right where the incident resulted from a supplier's act, including supply of equipment or material with patent or latent defects or sub-standard services. Section 17(c) covered acts done with intent to cause damage. It was Section 17(b) that made global vendors refuse to enter India, because no other jurisdiction imposed an automatic, statute-backed recourse on suppliers that could not be contracted away.

Draft amendments circulated from April 2025 proposed to tie that recourse to the value and duration of the supply contract rather than leaving it open-ended. The reform went further than the drafts. The SHANTI Act, 2025 came into force on 21 December 2025, repealing both the CLNDA and the Atomic Energy Act, 1962. Under the new law the operator's right of recourse survives only in two situations: where it is expressly written into a contract, or where the incident results from an act or omission done with specific intent to cause nuclear damage. The automatic statutory channel that Section 17(b) represented is gone.

This shifts the underwriting question from a legal reading of the statute to a commercial reading of the contract. A supplier that signs a back-to-back recourse clause capped at contract value has a knowable, insurable number. One that signs an uncapped indemnity has re-created the very exposure the reform removed, and no pool product will simply absorb that.

India's nuclear liability market runs through the India Nuclear Insurance Pool (INIP), formed in June 2015 and led by GIC Re with the participation of most domestic non-life insurers. The pool was created precisely because the nuclear exclusion in conventional treaties left almost no commercial capacity for these risks. It launched with a capacity of around Rs 1,500 crore, matched to the operator liability cap of the time.

The pool offers two distinct products. The first is the Nuclear Operators Liability policy, which responds to the operator's statutory third-party liability. The second, and the one that matters here, is the Nuclear Suppliers' Special Contingency policy, sometimes described as the right-of-recourse cover. This is the product built for vendors: it responds when an operator exercises recourse against a supplier following a nuclear incident, indemnifying the supplier for the amount it is legally obliged to pay.

Under the older CLNDA regime the recourse period was linked to the initial licence period issued under the Atomic Energy (Radiation Protection) Rules, 2004 or the product liability period, whichever was longer, a window generally running five to seven years. The supplier product was designed around that duration. With the SHANTI Act removing the statutory trigger, the special contingency policy increasingly responds to contractually agreed recourse rather than a statutory one, which makes the underlying purchase-order wording part of the underwriting file.

Capacity remains the binding constraint. A single pool cannot easily stretch to cover a full fleet of new private reactors and their supply chains at once, so reinsurance support and international pool cooperation are what any expansion of supplier cover will depend on.

The most consequential detail for a supplier's programme is the cap. When recourse is limited to the value of the supply contract, the maximum recovery an operator can pursue is bounded and knowable, which is exactly what an underwriter needs to price and reserve. An uncapped or open-ended recourse, by contrast, is close to uninsurable at commercial terms because the loss has no ceiling short of the operator's full liability.

Under the SHANTI Act the operator's own liability is no longer a flat Rs 1,500 crore for reactors of 10 MW thermal capacity and above. The new law introduces graded caps linked to the size and capacity of the installation, with the government continuing to backstop claims above the operator layer up to the international reference of 300 million Special Drawing Rights. For a supplier, the practical planning number is not the operator cap but the contract-value cap written into its own agreement, because that is the most an operator can recover from it once recourse is contractual.

This is where broking discipline earns its fee. A supplier should align three numbers: the recourse cap in the supply contract, the duration of the recourse right, and the sum insured and period on its special contingency policy. A mismatch on any of them produces a gap. A contract that caps recourse at contract value but a policy limit set below that value leaves the supplier self-insuring the difference. A recourse right that survives seven years against a policy written for three re-creates a tail exposure the moment the policy lapses.

Brokers should also test how the indemnity responds to defence costs, whether they sit inside or outside the limit, and how the wording treats consortium or sub-supplier arrangements where liability may be shared. On a large EPC package the equipment vendor, the software supplier and the civil contractor can each hold a slice of recourse exposure, and the cover has to follow the contract structure rather than a single named insured.

The liability reform did not happen in isolation. The Union Budget 2025 announced a Nuclear Energy Mission with an outlay of around Rs 20,000 crore, a push to develop indigenous Small Modular Reactors, and a target of 100 GW of nuclear capacity by 2047. Achieving that scale is impossible with the public sector alone, so the mission is explicitly built to bring private and foreign participation into a sector that was, until now, a state monopoly under the Atomic Energy Act.

For the insurance market this changes the customer base. Until recently the only nuclear operator writing meaningful liability cover in India was a public-sector entity. A private operator building or running a Small Modular Reactor is a new kind of insured, with a different balance sheet, different lender covenants and, critically, a different appetite for pushing recourse liability down its supply chain. Private operators negotiating hard contracts are more likely to insist on recourse clauses, which increases the volume of supplier special contingency cover the market will be asked to write.

Foreign vendors returning to the Indian market are the second new cohort. Many stayed away for a decade precisely because of the Section 17(b) exposure. With that statutory channel removed and recourse now contractual and capped, the risk becomes something their own corporate insurance programmes and the Indian pool product can be structured around. That does not make it automatic. A foreign supplier still has to confirm that Indian-situs recourse liability is covered by a locally admitted policy, because a claim brought in India against equipment installed in India is not something an unadmitted overseas third-party liability programme will reliably answer.

The open question is capacity. If a wave of private reactors and their supply chains all seek cover from a single domestic pool, the pool's limit and its reinsurance support will be tested. How quickly capacity scales, and on what terms, will shape whether the mission's timeline is matched by insurable supply-chain risk.

A broker placing supplier or vendor cover on a nuclear project should work from the contract outward, not from a standard liability form inward. The first read is the recourse clause itself. Confirm whether recourse is expressly provided, whether it is capped at contract value, and what duration it runs for, because under the SHANTI Act these contract terms now define the exposure rather than the statute.

Second, map the cover to those terms. The special contingency policy wording should match the sum insured to the recourse cap, the policy period to the recourse duration, and should make clear how it interacts with the supplier's ordinary product liability programme, which will almost certainly carry a nuclear exclusion. A vendor cannot rely on its general product liability tower to pick up a nuclear recourse claim.

Points to verify before binding

• Whether the recourse clause is capped and whether the policy limit meets or exceeds that cap
• How defence and legal costs are treated, inside or outside the limit
• The run-off or extended reporting position, since recourse rights can outlive an annual policy
• Whether consortium, sub-supplier and back-to-back arrangements are all named or scheduled
• Whether a foreign vendor's exposure is covered on an admitted, Indian-situs basis

Third, treat the first-party and third-party pieces as separate placements. Equipment erection and testing exposures on a nuclear site still belong in an engineering-insurance programme with its own conditions; the recourse liability is a separate contingency. Bundling them under one assumption is how gaps appear.

Getting a supplier's nuclear liability programme right depends on reading how the special contingency wording, the exclusions and the recourse-trigger language actually operate, and how they line up with the underlying contract. Sarvada gives commercial insurance brokers structured, searchable access to insurer policy wordings and the intelligence around them, so a nuclear vendor's cover is built on real wording detail rather than assumption. Request Access to bring that depth to specialised power and energy placements.