Recalibrating India’s Nuclear Future: From State Monopoly to Strategic Innovation

With Finance Minister Nirmala Sitharaman unveiling the Nuclear Energy Mission in the 2025 budget, India's nuclear energy plans are now making progress. The plan to give ₹20,000 crore (USD $2.30 billion) towards the development of indigenous SMRs and make the nuclear sector more open is a major reform in India's civil nuclear policy.

Illustration by The Geostrata

Smt. Sitharaman stressed that the country needs to find new and sustainable energy solutions as its industrial activity grows and its energy needs rise.

The program plans to build one nuclear reactor a year and manufacture at least five SMRs by 2033.

In addition, the announcement expressed the government’s plan to change the Atomic Energy Act and the Civil Liability for Nuclear Damage Act to attract more private interest in the nuclear industry. Such domestic changes are vital for India to reach its target of 100 GW of installed nuclear capacity, set for 2047, to support a well-developed India.

This nuclear initiative is especially remarkable because it was announced just after the United States lifted trade bans on three Indian nuclear firms. This change is part of a wider strategy to improve nuclear cooperation between countries and transform India’s power sector. In these cases, New Delhi is preparing for a nuclear energy shift, especially by promoting SMRs and engaging more private firms. But dealing with regulatory obstacles is necessary to make full use of nuclear energy.

SMR'S: COMPACT SOLUTION FOR INDIA'S EXPANDING ENERGY NEEDS

While facing urgent energy issues such as frequent power shortages, rising demand from industrial and agricultural sectors, and dependence on fossil fuel imports, India requires an upsurge in its average energy output to support modern technologies, factories, and farm sectors while striving to achieve net-zero greenhouse gas emissions. Even though setting up a nuclear plant is more expensive than several renewable energy sources, it requires significantly less land than solar or hydro projects and produces a much more reliable and uninterrupted power supply.

In this backdrop, smaller nuclear reactors are seen as an efficient response to the rising energy needs of Indian industries, including those in the artificial intelligence sector that New Delhi is seeking to improve. In India, SMRs present a scalable and accelerated pathway to grow the use of nuclear energy since each unit can produce up to 300 MW of electricity. Small Modular Reactors (SMRs) offer a scalable and quicker alternative to traditional nuclear plants, with compact design, factory-built modules, and faster, cost-effective deployment—making them ideal for meeting India’s rising energy demands.

SMRs depend on private investments to speed up deployment, distribute financial risks, and drive innovation and efficiency in expanding nuclear energy. Experts, including nuclear engineers, infrastructure planners, and regulatory specialists, are hoping that they will speed up safe nuclear expansion in cities, data centers, and remote communities.

Using the SMR approach could make a big difference in India’s techno-industrial energy system, supporting the economy and increasing safety. Thanks to initiatives such as Make in India and Atmanirbhar Bharat by the Government of India, through SMRs and greater private sector activity, New Delhi is modernising its nuclear energy sector.

Although most reactors are not thought to promote nuclear proliferation, some advanced ones are considered dangerous in this way.

Compared to reactors of other designs, pressurized heavy water reactors (PHWRs) are usually believed to run a higher risk of nuclear proliferation, as they make it easier to produce weapons-grade uranium and large amounts of plutonium. In general, most nuclear power reactors continue to face concerns about the dangerous use of civilian nuclear materials and equipment, which makes it difficult for nations to manage international compliance. Since each advanced reactor type can reduce or add to proliferation risks, results depend on factors such as fuel choices, security arrangements, and the level of caution taken.

India agreed in 2006 to divide its civilian and military nuclear sites and place some or all newly developed reactors, including PHWRs, under the supervision of the IAEA. Even though the safety and easy scalability of SMRs can be sold as advantages, these types of reactors are still as much of a security problem as any other. SMRs, as with other reactors, use nuclear material and technologies that need close oversight. 

LEGISLATIVE HURDLES AND PRIVATE SECTOR PARTICIPATION

At present, only 3.15 percent of India’s energy comes from nuclear sources. Helping the Indian nuclear sector grow and thrive will depend on significant funding to meet the 2070 goals of net-zero emissions. Even so, there have long been restrictions imposed by existing laws. Right now, both fuel provision and research into nuclear power are handled by the government’s Department of Atomic Energy (DAE). For this reason, the sector is wholly dependent on public funding.

The Atomic Energy Act discourages private investments in nuclear energy for civil use, as CLNDA makes investors fully responsible for damages, up to ₹1,500 crore (USD $180 million).

Even so, the law still forbids Indian private and foreign firms from investing directly in nuclear power. It made sense to restrict all nuclear activity to the DAE at a time when secrecy was a big part of India’s nuclear energy program. For a nation facing many dangers, high-risk nuclear growth, and fear of foreign firms’ escape from liability, the strictness of the Act made sense.

Since that time, the Indian nuclear energy sector has seen many changes. In today’s situation, having just one agency in charge of India’s civil nuclear energy isn’t enough to raise the capital needed to build more nuclear plants. Including private businesses and international investment in the nuclear sector may encourage greater innovation.

Although it isn’t known exactly what the new laws will include, the idea has been put forward that private companies should have more involvement in nuclear projects. Because the nuclear industry is so important and strategic, governments will keep the sector under regulatory radar. It is being suggested that civil nuclear power oversight will be handed from the DAE to the Ministry of Power.

The agency would still manage both fuel and spent fuel, as required, to secure non-proliferation. In addition, the CLNDA’s [Civil Liability for Nuclear Damages Act] future changes might set up financial responsibility, helping investors and encouraging more people from the private sector to participate.

However, before anyone knew the CLNDA might be amended, the NPCIL had initiated work with private-sector firms by engaging them, as a pilot and as an exercise to get a hold of industry instinct on the initiative. In December 2024, a full version of the request for proposals, asking interested investors to develop two 220 MW PHWRs. 

So far, the CLNDA has been challenging, both discouraging financiers and preventing progress in new technology, since nuclear operators have to bail out the country solely if anything bad happens. Therefore, India had to create particular intergovernmental agreements, one of which was in 2008 that cleared Rosatom’s Russian suppliers from nuclear liability, allowing India to get reactors from them.

GOVERNANCE, SECURITY, AND INDIA'S STRATEGIC PATH

To help India liberalise the nuclear energy sector, two things are important: setting up trustworthy oversight for all activities and clearly drawing lines around liability in private projects. Though potentially huge profits can be earned with nuclear energy investments, the changes needed for private participation must focus on important security and regulation matters. As the Atomic Energy Act is being updated, there are real concerns about the risk of nuclear technology being misused. It's important to have strong checks in place while allowing the sector to grow.

Over the years, the DAE has faithfully supervised the secure handling of important nuclear materials, as expected by international nonproliferation groups.

Still, at the start, involving private businesses could threaten national control, mainly by jeopardising knowledge about state regulations, respecting nonproliferation rules, and lessening compliance with particular standards.

The majority of Western nations allow private groups to create and run nuclear power plants, while governments are in charge of the design and operation, and independent organisations make sure the plants comply with the rules and take responsibility according to the laws. India is trying to make this change using laws set up for a state-run company, and citizens worry that the oversight will be enough to handle the entry of private companies. India’s current nuclear laws aren’t built to include private companies, and trying to bring them in could make things messy and overly complicated.

Besides, it is still not clear how international collaboration will work: whether joint ventures will involve foreign technology providers and, if so, what the arrangements will be, or if NPCIL will participate along with them. Now that the situation is changing, these uncertainties must be discussed. Additionally, there is also the question of whether the civil nuclear sector will be absorbed by the Ministry of Power, sharing responsibilities with the DATE [Duly Authorised Telecoms Entity] for fuel, and letting the inexperienced private sector handle things would be a point of concern.

If roles aren’t clearly defined, these changes could weaken industrial safeguards and increase the risk of nuclear material misuse. The Ministry of Power, if at all placed in charge of the civil nuclear sector in any capacity, needs to treat these security issues as a top priority. Unclear roles among regulators may result in too many steps to approve projects, extra delays, and missing out on some critical safety measures.

Under this arrangement, the DAE would still keep possession of nuclear materials, but must have rules in place that mean it isn’t held liable if something goes wrong. That’s why, as in many Western nations, it is crucial to have an independent regulator in this situation.

Often, there are several nuclear ministries worldwide, yet their systems function because of the work of regulators and clear laws. The Atomic Energy Regulatory Board of India (AERB) is supposed to be independent, but its role is still directed by the DAE. For nuclear power generation to grow further, private businesses must be included in the oversight of a truly independent regulatory authority. Separating those who oversee regulations from those who manage nuclear plants is well accepted in international nuclear governance.

For now, India must make sure its system has the proper safeguards before embracing new technologies, to avoid overlaps in regulations, worries about safety, and differences in accountability that can impact India’s attempts to secure beneficial nuclear energy.

To ensure energy security, reduce reliance on fuel imports, and strengthen self-reliance, India is on a path to fully implement Dr. Bhabha’s 3-point nuclear program vision and press forward its nuclear energy efforts. Stage 1 (PHWR reactors) has made good progress and is now used in 24 reactors, but Phase 2 (fast breeder reactors) is just getting launched at Kalpakkam, and PHWRs are the only phase in use so far. Since India has a large supply of thorium, the government should make developing thorium reactor technology a main priority.

THE POLICY SHOULD INCLUDE THE FOLLOWING MEASURES:

Dedicated National Thorium Mission: The Department of Atomic Energy should take charge of a main mission for Thorium reactor development, with specific funds, timelines under international cooperation.

Fast-Tracking Stage 2 Implementation:  Speed up the introduction of fast breeder reactors by 2030 and make sure all are fully working by 2030, so that they can prepare for the thorium fuel cycle, the final stage.

Public-Private Collaboration: Indian startups, engineering firms, and educational institutes should help lead R&D, design, and the development of technology for thorium reactors and supporting systems in collaboration with the government.

Strategic Alliances: Collaborate with global partners and other like-minded nations on nuclear research, while steadfastly upholding India’s strategic autonomy and ensuring no foreign influences over the Indian national civil nuclear program’s objectives.

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BY POSHIKA MUKKU

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