India’s nuclear energy goals have taken a significant leap forward with Finance Minister Nirmala Sitharaman’s recent announcement of the Nuclear Energy Mission in the 2025 budget. With an allocation of Rs. 20,000 crore (USD $2.30 billion) to focus on the development of indigenous small modular reactors and liberalization of India’s nuclear energy sector, this initiative marks a historic shift in Indian nuclear policy. Sitharaman emphasized the urgent need to diversify India’s energy portfolio in response to the country’s rapidly expanding industrial base and growing energy demands, setting the ambitious goals of commissioning one reactor per year and producing at least five small modular reactors by 2033. The announcement also declared the government’s intent to finally amend India’s Atomic Energy Act and the Civil Nuclear Liability Damage Act in hopes of incentivizing private investment into the nuclear energy sector. India’s domestic nuclear energy reforms are a crucial part of its broader goal to achieve 100 GW of installed nuclear capacity by 2047, in line with the vision of a “Viksit Bharat”(Developed India).
The timing of this nuclear energy push is particularly significant, coming shortly after the United States lifted trade restrictions on three Indian nuclear entities, signaling a broader push to strengthen bilateral nuclear energy cooperation and transform India’s energy landscape. These recent actions indicate that New Delhi is paving the way for a nuclear energy revolution, driven by a focused push for small modular reactors and increased private sector involvement, but it will have to address regulatory roadblocks to fully unleash nuclear energy’s potential.
Fitting Small Modular Reactors into India’s Energy Basket
Amid India’s efforts to address its escalating energy challenges, the country needs to significantly increase its per-capita energy production to support its advanced technology, industrial, and agricultural sectors, all while striving to achieve net-zero greenhouse gas emissions. While nuclear plants may require higher upfront investments compared to other renewable sources, their land footprint is significantly smaller than that of solar and hydro power, and their electricity output is more reliable.
In this context, the development of captive smaller nuclear reactors emerges as a potentially viable solution to meet the growing energy demands of India’s emerging industries, particularly the power-hungry artificial intelligence industry that New Delhi has been keen on advancing. In the Indian energy landscape, small modular reactors (SMRs) have the potential to quickly scale up nuclear energy, with a per unit power capacity of up to 300 MW. At a size of almost one third of standard nuclear reactors, SMRs are projected to be faster and more cost-effective to build in comparison to traditional reactors.
With the anticipated involvement of the private sector, SMRs are projected to accelerate safe, decentralized nuclear deployment, benefitting urban industries, data centers, and remote regions. The SMR approach has the potential to substantially strengthen India’s techno-industrial energy base, thereby promoting economic growth and enhancing security.
New Delhi is paving the way for a nuclear energy revolution, driven by a focused push for small modular reactors and increased private sector involvement, but it will have to address regulatory roadblocks to fully unleash nuclear energy’s potential.
Some advanced reactors, however, have specific proliferation risks. Reactors operating with pressurized heavy water designs (PHWRs) are often deemed to pose a comparatively higher proliferation risk, as they can produce weapons-grade uranium and high concentrations of plutonium in spent fuel. In general, the risk of weapons proliferation from civilian nuclear materials and facilities remains a challenge for all nuclear energy reactors, albeit to varying degrees, and poses complexities for international nuclear material controls. Advanced reactor designs introduce both opportunities and challenges in this regard, as their technical features can either mitigate or exacerbate proliferation risks depending on fuel cycles, security measures, and safeguards implementation.
India’s 2006 separation plan outlined the division of India’s civilian and military nuclear facilities and placed some or all newly commissioned reactors—especially PHWRs—under IAEA safeguards and international inspection. While SMRs are often promoted for their safety, efficiency, and scalability, they are not inherently less of a proliferation concern. Like other reactors, SMRs involve nuclear materials and technologies that require stringent oversight. Thus, the involvement of foreign and private investors in SMR development further necessitates careful management of proliferation-related apprehensions, ensuring strict compliance with non-proliferation commitments to maintain international confidence.
Recent Legislative Reforms and Their Implications
Currently, nuclear energy accounts for just 3.15 percent of India’s total energy mix. The much-needed expansion and revamping of the Indian nuclear sector requires substantial funding to help meet the country’s net zero targets by 2070. However, existing legislation has long hindered progress. At present, fuel supply and the research and development of nuclear power generation in India are solely handled by the government’s Department of Atomic Energy (DAE). The sector therefore relies entirely on government funding. The Atomic Energy Act restricts private investment in the civil nuclear sector, and the Civil Liability for Nuclear Damage Act (CLNDA) imposes the entirety of the liability burden—capped up to Rs.1,500 crore (USD $15 billion)—on investors, further deterring private participation. The Atomic Energy Act was amended in 2015 to permit public sector joint ventures in the nuclear energy sector. However, the amendment still prohibits direct investment in nuclear power by private sector companies and foreign entities in India.
The Atomic Energy Act, which placed all nuclear activities under the DAE’s exclusive authority, was logical at a time where secrecy pervaded many nuclear energy programs. The Atomic Energy Act’s restrictive nature was logical at a time when India’s nuclear sector was still developing, proliferation risks were high, and the country faced threats of economic sanctions and concerns over foreign companies evading liability. The nuclear landscape has evolved since then. In the current context, the sole ownership of the DAE over India’s civil nuclear energy domain is insufficient in garnering the massive capital required for expansion. Allowing private sector participation and international investment in the nuclear sector could drive innovation and economies of scale, ultimately reducing technical costs over time, particularly if private and experienced foreign players are incentivized to engage in the manufacturing of SMRs.
While the precise nature of the upcoming legislative amendments is currently unknown, it has been proposed that the Atomic Energy Act should be liberalized to allow private investments and make space for private sector operators. Nonetheless, given the critical and strategic nature of the nuclear sector, there will continue to be a strong government presence. Reports suggest that the reforms may include the transfer of oversight of civil nuclear power generation from the DAE to the Ministry of Power. Under this proposed shift, the DAE would continue to retain full control over fuel supply and spent fuel handling to address any potential proliferation concerns. Additionally, the potential amendments to the CLNDA may introduce a shared financial liability framework, potentially easing the burden on investors and encouraging greater private sector participation.
The Indian nuclear power industry has already been moving closer to private sector involvement. Months before the announcement that proposed amending the CLNDA, the Nuclear Power Corporation of India Limited (NPCIL), a public sector enterprise under the administrative control of the DAE, had already taken steps to involve private sector players. In December 2024, they issued a detailed and comprehensive request for proposals, inviting investors to develop two 220 MW PHWRs. However, until now, the CLNDA has been a huge impediment, not just dissuading investment, but also technology transfer because the entire share of liabilities has rested on nuclear operators in case of an accident. Because of these challenges, India has had to make specific intergovernmental agreements to expand nuclear power capacity, such as a 2008 agreement granting Russian suppliers a specific liability exemption for nuclear damage, allowing India to source reactors from Russia’s state-owned Rosatom. Should there be bureaucratic delays that arise while amending CLNDA, a similar bilateral approach could be adopted in the interim. But this ad hoc approach is not entirely desirable, as it could create legal inconsistencies, favor certain players over others, and potentially undermine the regulatory framework meant to ensure fairness and accountability in the sector.
Regulatory Roadblocks: Legislative and Proliferation Challenges
As India moves toward liberalizing its nuclear energy sector, two critical challenges must be addressed: ensuring fair and independent institutional oversight across both government and private sector activities and establishing clear demarcations on liability in private sector projects. While economic gains from international nuclear energy investment could be substantial, the structural changes required to accommodate private sector participation will need to address important security and regulatory concerns.
As the Atomic Energy Act stands to get amended, one of the primary concerns is proliferation risk. The DAE has long been responsible for upholding a strict oversight of sensitive nuclear materials, in line with international nonproliferation norms. However, the entry of the private sector may initially pose challenges, potentially in the form of lack of institutional knowledge, regulatory discipline, and adherence to strict nonproliferation norms as are presently followed by state-run agencies. Most Western nations permit private players to construct and operate nuclear power plants, with the government overseeing design and operational regulations, while independent regulatory bodies ensure compliance and liability determined by national laws. India, on the other hand, is attempting this shift while still relying on a regulatory framework designed for a state-monopoly, raising concerns about whether oversight mechanisms will be robust enough to manage new private players effectively. India’s existing legal and regulatory framework does not fully account for private-sector involvement in nuclear energy, and it may be a learning process for the state to regulate this involvement without stifling it with red tape. Furthermore, the specific architecture of international collaboration currently remains unknown: if joint ventures will be formed with foreign technology providers, how will these partnerships be structured or if India’s state-run operator, NPCIL, will still participate. These uncertainties must be explicitly addressed as the situation continues to evolve.
Additionally, if civil nuclear power eventually does end up falling under the Ministry of Power— sharing responsibilities with the DAE over fuel management while also involving an inexperienced private sector—it would also be a significant structural change. Implementing these proposed changes without clear delegation of responsibilities risks undermining safeguards against nuclear material diversion and technology proliferation. The Ministry of Power will need to adequately prioritize these security concerns. Without clarity, overlapping roles could lead to regulatory bottlenecks, delays in project approvals, and potential gaps in safety enforcement. While nuclear material would still remain under the DAE’s ownership, specific protocols must also be established to ensure that the DAE retains ownership without assuming liability in the event of an accident. In this context, an independent regulator becomes essential, as is the practice in many Western countries.
Multiple ministries handling nuclear affairs is common globally, but those systems work because of independent regulators and clear legal frameworks. Although India’s Atomic Energy Regulatory Board (AERB) is nominally autonomous, it remains under the DAE, limiting its ability to function independently. A truly independent regulatory body would provide oversight across both government and private sector activities, a necessity as private participation in nuclear power generation expands. Without such oversight, potential gaps in safety enforcement, non-proliferation compliance, and liability accountability could undermine confidence in the sector. The separation of regulatory authority from operational entities is a well-established principle in international nuclear governance. India’s challenge is navigating this shift without first establishing similar safeguards, risking regulatory overlaps, safety concerns, and gaps in liability enforcement. Strengthening AERB’s independence or establishing a new regulatory institution would reinforce credibility, ensure compliance with global safety norms, and enhance investor confidence in India’s nuclear sector.
Strengthening AERB’s independence or establishing a new regulatory institution would reinforce credibility, ensure compliance with global safety norms, and enhance investor confidence in India’s nuclear sector.
The Future of Nuclear Energy in India
India’s proposed nuclear energy expansion and regulatory amendments present promising opportunities but require overcoming significant hurdles. These include security concerns, bureaucratic restructuring, and legislative delays. Careful management of international collaborations and safeguarding against proliferation risks will be essential to incentivize more investors and facilitate economies of scale. It will be critical for India to align with international frameworks such as the Convention on Supplementary Compensation (CSC) for nuclear damage and strengthen AERB’s independence. Doing so will instill confidence among global nuclear partners and enable the creation of a well-structured insurance system. The fueled investment and amendment of India’s nuclear energy sector marks an important step forward. These changes could strengthen India’s energy security, support economic growth, and advance net zero goals. Concerning the development and deployment of SMRs, these amendments could potentially enable economies of scale and innovation. The move is a long-due step forward, and with the right implementation and governance frameworks in place, it has the potential to deliver long-term benefits for both India’s growth and its energy landscape.
Also Read: SAV Collection: South Asia’s Quest for Nuclear Energy
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Image 1: XAVIER GALIANA/AFP via Getty Images
Image 2: Dean Calma / IAEA via Flickr
