India’s nuclear energy ambition: expanding the ambit

_{Key takeaways for investors.}

• Entry window: The SHANTI Act, 2025 opened India’s nuclear sector to private and foreign participation, but the FDI framework and final rules are still pending. The next six to 12 months could bring rules, enabling policies, and government-to-government agreements together, rewarding investors that engage the reform process early.

• First private test case: Hindalco’s proposal for a 220 MW captive Bharat Small Reactor is the first of its kind, and its progress will signal how commercially viable private nuclear participation can be in India.

• Social license: The Mithi Virdi project, a planned 6,000 MW development backed by government and a major vendor, stalled under community opposition and was relocated. Community consent, fair compensation, and transparent safety communication are gating conditions, as critical as finance, technology, and regulatory clearance.

After many decades, India is moving on multiple fronts to operationalize private sector, including foreign, investments in and operations of nuclear power plants in the country. This presents an opportunity for companies to contribute towards the reform process that can shape the license to operate in a complex, highly regulated and among the sensitive sectors for the country. The next six-twelve months could see the rules and regulations, other associated enabling frameworks and policies, as well as G2G cooperation agreements converging for the private and foreign investor to invest and plan. This article covers some of the key aspects and status of where things stand.  

In India, 24 reactors are currently operational with a capacity of 8780 MWe (excluding Rajasthan Atomic Power Station 1) in the country. In addition, 8 reactors with total of 6100 MWe are under construction, and 10 reactors with total capacity of 7000 MWe are in the advanced stage of beginning the construction. With these, by 2031-32, the installed nuclear capacity is expected to reach around 22 GWe (excluding RAPS 1).

_{The enabling framework for foreign investors expected to be out soon}

India’s SHANTI Act, 2025 (Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Act) replaced all nuclear related legislations in the country opened the sector to private and foreign participation. However, to enable FDI into nuclear energy, requires a framework and enabling executive provisions that can facilitate it. Towards this, India’s Department of Atomic Energy (DEA), has approved the FDI policy which will then go through interministerial consultations. Once finalized and post Union Cabinet approval, this can then allow foreign investors to directly participate in accordance with the permitted limits. Currently, nuclear energy is out of bounds for private/foreign sector investments and is prohibited as per the policy. Additionally, it was not allowed in mining of prescribed substances issued by DEA. However, there is “no restriction on FDI in the nuclear industry for manufacturing of equipment and providing other supplies for nuclear power plants and related other facilities.” The former is an opportunity that exists currently and has the private sector participation for the last couple of decades.  

_{Draft SHANTI Act Rules}

Late August, Government of India put out the Rules of the SHANTI Act that was passed by the Parliament of India end 2025. Inputs collated are being reviewed and analyzed. The technicalities as well as implications necessitate this taking sometime for finalization. Core to this are concerns around liabilities. Under the proposed law, nuclear plant operators would be fully responsible for any nuclear damage, even if it happens while nuclear material is being transported. They would also be required to have insurance, financial guarantees, or both. A Nuclear Liability Fund would be created using contributions collected from operators, and the maximum amount of liability would be reviewed every five years.

The main concern is that suppliers would have much less responsibility. The SHANTI Act keeps two provisions from the 2010 liability law but removes Section 17(b), which held suppliers responsible for defective equipment, hidden faults, or poor-quality services. Now, an operator can recover money from a supplier only if this is specifically agreed in their contract. This means that a supplier's responsibility for faulty equipment will depend on how well the contract is written and negotiated. Experts have pointed out that this limited right of recovery in the draft rules creates uncertainty about who would be held accountable for defective equipment or technology within the supply chain.

_{Draft Electricity Policy 2026}

To aid what the SHANTI Act & Rules will potentially unlock for the private sector, the draft Electricity Policy that will be finalized and approved soon proposes nuclear projects to be eligible for green funding. The government will look at several ways to grow nuclear power. These include building new reactors at existing nuclear sites, and replacing coal power plants that factories run for their own use with nuclear plants wherever possible. To keep costs down, it plans to build many reactors of the same standard size together, and to develop local suppliers for the parts and services they need. Old coal power plant sites that have shut down could also be reused for nuclear plants.

Big commercial and industrial users of electricity should be encouraged to buy power from nuclear sources. Future nuclear plants could also be designed to raise or lower their output as needed and could use a two-part pricing system (a fixed charge plus a charge for actual power used). This would help them work alongside solar and wind power, whose supply goes up and down with the weather.

All of this will be done as part of the larger plan to make sure the country always has enough electricity and stays secure in its energy supply. The National Electricity Policy (NEP) 2026 supports newer nuclear technologies, including modular reactors (built in factory-made sections) and small reactors, and encourages businesses and industries to use nuclear power.

_{Private Sector Participation}

India’s private sector has participated in the country’s journey so far. However, the SHANTI Act paves way for them to move towards operating them. The rules, once finalized, will become a key element in this direction. Ahead of these, Nuclear Power Corporation of India Limited (NPCIL) floated RFP to finance and build a fleet of Bharat Small Modular Reactors (these are slightly smaller, 220 MW, than the SMR of 300 MW as defined by IAEA). Meant to be captive power plants, among the companies that showed interest, it was HINDALCO (Aditya Birla Group) that has submitted a financial proposal. Being a first of its kind partnership with the private sector, if this proposal fructifies, this will be keenly watched.  

_{Social license to operate}

A nuclear project needs more than government approvals, investment and technology to succeed. It also needs a social license to operate: the ongoing acceptance and trust of the local communities whose land, livelihoods and environment it affects. For instance, the Mithi Virdi Nuclear Power Project in Gujarat. Proposed in 2007 in Bhavnagar district, the project had every formal advantage. It was signed by the Gujarat government, the Nuclear Power Corporation of India Limited (NPCIL), and Toshiba's Westinghouse Electric Company at the Vibrant Gujarat Summit, and was seen as a major step forward in India–US economic and strategic ties. The plan was to build six 1,000 MW light water reactors supplied by Westinghouse, adding 6,000 MW of clean power to the grid. The villages mounted strong and sustained opposition. Combined with procedural and ecological problems, the resistance stalled the project for years, and by 2018 it was moved to Kovvada in Andhra Pradesh. However, recently, NPCIL has signed a memorandum of understanding to explore and identify suitable sites in India’s Gujarat state for new nuclear power plant projects.  

The lesson is that high-level agreements and strategic importance cannot substitute for community consent. Early and genuine engagement, fair compensation, credible rehabilitation and transparent communication about safety are not optional extras but conditions for a project to move forward at all. As India plans a large expansion of nuclear power, including on new and brownfield sites, earning a social license to operate will be as critical as securing finance, technology and regulatory clearance.

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