The Nuclear Crossroads: An Inflexion Point or a Dead-end?

With 8.2GW in 2023-24, India is ninth in the list of global nuclear capacity generation today, modest in comparison with the three leading countries, the US, France and China. India has an ambitious target of 22GW by 2032 and 100GW by 2047, which would mean a 12% CAGR compared with 4% now.

For decades, the civil nuclear energy sector has been the exclusive domain of the state-owned Nuclear Power Corporation of India Ltd, which operates 23 reactors with a total installed capacity of 8.8GW.

Despite its technological prowess, exemplified by an indigenous fleet of Pressurised Heavy Water Reactors (PHWRs), the sector has been characterised by slow capacity addition, limited capital, and a rigid structure.

The national targets underline the risks of a large gap between aspirations and the state’s execution capability. Further, the 2008 Indo-US nuclear deal has not catalysed foreign investment, primarily because of the stringent Civil Liability for Nuclear Damage (CLND) Act and the prohibition on private ownership.

The current scenario is, then, one of a high-potential sector trapped in an institutional model insufficient for the scale of expansion required for energy security and decarbonisation.

Small Reactors
The government’s proposed reform, the planned ‘Atomic Energy Bill, 2025’, seeks to break this logjam not through complete privatisation, but through a cautious, controlled, contractual opening. It is being piloted through a tender for 220MW Bharat Small Reactors (BSRs), which reveals the architecture of the new policy through a hybrid, complex structure:

• Asset Ownership: The private party (the bidder) finances, builds, and operates the plant for captive use but must legally transfer the asset to NPCIL for a nominal ₹1. This circumvents the Atomic Energy Act’s ban on private ownership of nuclear assets.
• Risk & Operations: The private entity bears the construction costs, operational risks, and even waste management costs. It pays NPCIL a significant “expertise charge” (a point of major contention) for operational oversight and licensing.
• Liability: The full weight of the CLND Act remains, placing substantial liability risk on the operator.
• Broader Ambition: The government also hints at allowing private firms into uranium mining and processing, aiming to build an integrated private industrial ecosystem around nuclear energy.

The pilot has hit significant turbulence: in 687 queries from bidders like Reliance, Tata, and Adani, core issues of financial viability have also emerged. The inability to hold the asset as collateral cripples debt financing, high NPCIL service charges and a low assumed Plant Load Factor render the economics questionable, and repeated delays in the tender underscore a fundamental misalignment between the state’s risk-averse, control-oriented model and the private sector’s need for bankable, profitable projects with predictable timelines.

Global Experience
The global lesson is that nuclear energy, due to its capital intensity, long timelines, and unique risks, cannot thrive on purely market terms. Successful models involve the state absorbing or mitigating fundamental risks (finance, liability, waste) that the private sector cannot reasonably bear. India’s proposed pilot - asking private players to bear full capital cost, asset risk, and liability while ceding ownership - appears to attempt to offload too much risk, the inverse of proven models, which explains the bidder resistance.

Internationally, the state’s role is seen as inescapably central, but the models vary:

• The US Model (Private Ownership, Public Backstop): Private utilities own and operate reactors, but the state provides loan guarantees, limits liability via the Price-Anderson Act, manages waste disposal, and funds R&D. The state is the ultimate risk-manager and enabler.
• The French Model (State-Led Monopoly): The state, via EDF, owns and operates the fleet as a vertically integrated strategic national asset. It is a planner, owner, operator, and global exporter.
• The UK Model (Regulated Asset Base): Private consortia build new reactors (like Hinkley Point C) but are guaranteed a fixed return on capital by the government, transferring financing risk to the state and ultimately consumers.
• The China Model (Centralised state-coordinated and funded top-down industrial build-out): the state has standardised and scaled its indigenous reactor designs, achieving economies of scale and driving down costs, through a “fleet mode” deployment, overseen by huge state-owned public enterprises.

Available Options
The optimal, and prudent, choice for India lies in a hybrid approach, where the state has to evolve from a monopolistic producer to a strategic enabler and guarantor.

This would require sequenced reforms:

• The legislative foundation: Though this will be the most contentious, if the private sector is to be drawn in, amendment of the Atomic Energy Act and the CLND Act may be unavoidable to create a clear, investible framework before tendering - the CLND Act’s current provision may not be the best solution to the overhang of the Bhopal disaster. Defining a liability regime with a clear state backstop is one of the key demands of the private bidders- whether this can be worked out is moot, but the prudent solution may be to recognize that the objectives of assigning ultimate responsibility and enabling private investment require two separate, robust instruments, not one law that stymies both.
• Independent Regulation: Empower a truly autonomous regulator (AERB) to assure safety and investor confidence.
• Risk-Sharing Model: Adopt a modified RAB or enhanced loan guarantee model where the state shares financing risk for these first-of-a-kind private projects. NPCIL’s role would best be to shift from a fee-charging overseer to an equity partner or guaranteed off-taker.
• Modern Technology Focus: Prioritise inviting private investment into newer, more efficient technologies like Small Modular Reactors (SMRs), rather than scaled-down legacy PHWR designs, to attract global partners and better economics.

Strengths vs Concerns
The policy’s undeniable strengths are its recognition of the state’s capacity constraints and its potential to unlock massive capital and managerial efficiency. Success will be assured only if it triggers the development of a domestic high-tech industrial supply chain and it is structured to deliver competitive, clean baseload power to the grid.

However, there are some deep pitfalls in the current approach:

• Potential risk of financial unviability, leading to failed tenders or crony capitalism.
• Compromised safety if cost pressures trump rigorous oversight.
• Stranded assets and disputes from a poorly structured contract, and the perpetuation of a slow pace, defeating the reform’s very purpose.
• The “Gigawatt-Scale” vs. “Distributed SMR” choice: The debate often centres on whether to replicate large, centralised plants or, as the global future, and India’s own stated interest, seems to point to, Small Modular Reactors (SMRs). These present a strategic fork: should they be deployed for captive industrial use (as in the current BSR tender), for remote/off-grid power (replacing diesel use on islands, in mining, etc.), or for grid-scale aggregation? Each path has different implications for private sector roles, regulatory models, and grid architecture. In my view, the current tender’s focus on captive use for large industrials may sideline potentially more transformative applications for regional energy security in the country.
• Risk of regulatory capture: The current model, where the AERB reports to the atomic energy establishment, has already been criticised for lacking independence. Introducing influential, well-resourced private players into this ecosystem raises the spectre of regulatory capture. The state has to not only strengthen the regulator’s statutory independence but also fortify it against sophisticated corporate lobbying on safety standards, inspection frequencies, and operational relaxations, which will almost certainly be done all in the name of cost-cutting and “ease of doing business.”

Private participation, if it eventually includes foreign reactor vendors (Westinghouse, Rosatom, etc), is not just an economic decision- unlike solar panels, a nuclear reactor is a long-term geopolitical commitment.

The chosen technology will lock India into a specific fuel supply chain, spare parts ecosystem, and strategic relationship for 60-80 years.

While India has secured uranium via G2G deals, private plants reliant on imported, proprietary fuel designs (like Light Water Reactors) could create new vulnerabilities; retention of absolute sovereignty of the state over fuel cycle decisions to prevent external leverage is vital.

The Alternative
Make haste slowly, but on a different path.

While a cautious approach is prudent, the current path may be leading slowly in the wrong direction. Rushing through a flawed model risks a generational setback for nuclear energy in India. The evident distress in the pilot BSR tender suggests this model of private risk with public ownership is structurally flawed.

A feasible alternative which could be considered is one of sequenced legislative and regulatory reform first, followed by a public-private partnership model with genuine risk-sharing, potentially starting with more modern reactor designs- this recognises that the optimal solution is not to abandon private participation but to redesign it with the state playing its necessary, non-negotiable role as the guarantor of strategic risk, while harnessing the private sector’s efficiency in execution and operation.

The goal should be to create a sustainable investment ecosystem, not just to sign a contract. Learning from the global playbook, a framework where public interest and private investment are aligned, not at odds with each other, has to be crafted.