The Indian government is gearing up to shake the nuclear energy sector, with plans to dramatically increase foreign investment and boost capacity. The move, if executed, could reshape the country’s energy landscape and accelerate its transition away from coal. Here’s what we know and what it could mean.
The government is reportedly considering allowing foreign companies to own up to 49% of India’s nuclear power facilities. This potential policy shift is a bold step towards attracting foreign capital and expediting the development of cleaner energy sources. “With a pressing need to replace polluting coal with greener sources of energy, expanding nuclear power is seen as an essential part of the plan,” said a government source familiar with the matter.
The proposed changes come as India aims to raise its nuclear capacity by a staggering 12 times, from the current 8GW to 100GW by 2047. This ambitious target underscores the government’s commitment to nuclear energy as a key component of its energy mix. But to achieve this, India needs investment and expertise, and that’s where foreign companies come in.
However, foreign investors have historically been wary of India’s nuclear sector due to concerns about unlimited liability in the event of an accident. The government’s latest policy proposals aim to address these issues by modifying nuclear liability regulations and encouraging more private sector participation. “The necessary amendments to legal frameworks are expected to be presented to the federal cabinet soon,” said another source, with the goal of passing these changes during the monsoon session of parliament in July.
If these reforms go through, they could eliminate existing barriers to expanding nuclear energy. But the implications go beyond just increasing capacity. Foreign investments in India’s nuclear plants could have broader geopolitical and economic consequences, particularly with the US. A significant nuclear pact with the US in 2008 laid the groundwork for multi-billion-dollar deals with US businesses. While there’s speculation that foreign investments might prompt tariff negotiations, government officials have not confirmed if this would be tied to any specific trade agreement.
The proposed revisions to the Atomic Energy Act would allow private entities to construct, own, and operate nuclear power stations, as well as engage in the extraction and production of nuclear fuel. This could open up new avenues for both domestic and foreign participants in the sector, aligning with India’s long-term energy objectives.
But it’s not just foreign companies that are eyeing India’s nuclear sector. Major Indian companies such as Reliance Industries, Tata Power, Adani Power, and Vedanta are in talks with the government regarding an estimated $26bn investment in the nuclear power industry. This domestic interest, coupled with potential foreign investment, could drive significant growth in the sector.
As India moves away from coal, nuclear power is expected to play a vital role in complementing renewable energy sources such as wind and solar, particularly during periods of high demand. Several international companies, including Westinghouse Electric, GE-Hitachi, Electricité de France (EDF), and Rosatom, have expressed interest in collaborating on India’s nuclear energy projects. This global interest underscores the potential of India’s nuclear sector and the opportunities it presents.
The government’s plans to increase foreign investment and boost nuclear capacity are ambitious, but they’re not without challenges. The sector will need to address concerns about safety, liability, and public acceptance. But if the government can navigate these challenges, it could usher in a new era of nuclear energy in India, one that’s cleaner, more efficient, and better positioned to meet the country’s growing energy demands. The coming months will be crucial, as the government looks to pass the necessary legal changes and attract the investment it needs to make its nuclear ambitions a reality. The energy sector is watching, and the stakes are high.
