Major Policy Shift in Nuclear Energy: Key Takeaways from Budget 2025:

When Finance Minister Nirmala Sitharaman presented the first full budget of Modi 3.0 on February 1, 2025, a significant policy shift in nuclear energy was evident. Her announcement comprised three crucial elements:

Amendments to Nuclear Laws: The government plans to amend the Civil Liability for Nuclear Damage Act (CLNDA), 2010, and the Atomic Energy Act (AEA), 1962, to encourage greater private sector participation in India’s nuclear energy sector.

Nuclear Energy Mission: The launch of a ‘Nuclear Energy Mission’ with an allocation of Rs 20,000 crore for research and development of Small Modular Reactors (SMRs), with at least five indigenously developed SMRs expected to be operational by 2033.

100 GW Nuclear Energy Target by 2047: The aim to generate at least 100 GW of nuclear power to support India’s energy transition efforts.

100 GW Target: A Strategic Signal to the Private Sector?

The ambition to scale up from the current 8 GW installed nuclear capacity to 100 GW in two decades is an enormous challenge, requiring an estimated $200 billion, multiple geologically stable sites with access to water, and a robust nuclear fuel supply chain. Given the historical pace of growth, this target appears unrealistic. However, rather than being a concrete goal, it serves as a bold signal to attract private investment, reinforced by the proposed amendments to CLNDA and AEA.

Navigating India’s Nuclear Liability Framework

India’s nuclear liability law has been complex since its inception. The CLNDA primarily holds the operator (Nuclear Power Corporation of India Limited) responsible for liability, capping it at Rs 1,500 crore. If damages exceed this limit, the Indian government covers the difference up to 300 million SDRs, beyond which international funds under the Convention on Supplementary Compensation for Nuclear Damage (CSC) can be accessed. However, ambiguities in the liability framework have deterred private investment, particularly due to concerns around supplier liability in case of a nuclear accident.

One of the key deterrents is Section 17(b) of CLNDA, which grants the operator a right of recourse against suppliers if an accident results from defective equipment, materials, or services. This has discouraged foreign companies, including American and French firms, from investing in India’s civil nuclear program.

Addressing Ambiguity in Liability

The primary issue with India’s liability regime is not the quantum of liability but the uncertainty surrounding its applicability. Key concerns include:

The potential for Indian laws beyond CLNDA to hold suppliers liable.

The lack of clarity on whether the right of recourse is contractual or mandatory.

The compatibility of CLNDA with the CSC.

The possibility of future revisions in liability provisions.

The forthcoming amendments should focus on resolving these ambiguities while maintaining supplier accountability, given past instances where supplier negligence contributed to nuclear accidents.

AEA Amendments and the Push for SMRs

The proposed amendment to the AEA is particularly significant, as this law underpins India’s nuclear framework. A crucial question is whether this amendment will break NPCIL’s monopoly over nuclear power plant operations to facilitate private sector involvement.

The budget’s mention of five SMRs by 2033 and an allocation of Rs 20,000 crore also appears to be a strategic signal. Notably, no specific budget allocation for SMRs has been made in the 2025-26 financial plan, suggesting a longer-term vision. Additionally, India might replicate its 2024 strategy when it invited private players to build Bharat Small Reactors (a 220 MW version of pressurized heavy water reactors distinct from SMRs). The recent Indo-French collaboration on SMRs further highlights the government’s intent to boost India’s nuclear industry.