Nuclear power currently contributes only about 3% to India’s total electricity generation. However, the government aims to increase this to 25% by 2050 as part of its climate change commitments.
- To enable this target, significant investments are required to build new nuclear power plants. Currently, only state-owned companies can invest in this sector.
- In June 2022, the Indian government proposed allowing select domestic and global private companies to invest in nuclear power generation in collaboration with the state-owned Nuclear Power Corporation of India Limited (NPCIL).
Key Highlights
- The private participation is expected in the construction and operation of nuclear power plants and setting up nuclear fuel cycle facilities like heavy water plants.
- Foreign Direct Investment (FDI) up to 74% would be permitted under the automatic route for such joint ventures.
- This is aimed to help raise the funds required for India’s ambitious nuclear expansion plans.
Details of the Proposed Policy
- The private entities allowed will be Public Sector Undertakings (PSUs) and leading Indian industrial business houses jointly with NPCIL.
- Reputed global nuclear plant technology companies would also be invited to set up plants in India in collaboration with NPCIL and local partners.
- For nuclear fuel cycle facilities, the policy proposes to permit private sector participation with at least 26% domestic equity. FDI limit in this will be 74% under automatic route.
Benefits Expected
- Help plug funding gap: Cost of planned nuclear power plants could be $150-170 billion but NPCIL can invest only ~$90 billion.
- Allow faster capacity building by leveraging private capital and supplementing public investments.
- Attract global technology players to set up facilities in India by offering investment opportunities.
- Create manufacturing ecosystem for nuclear equipment like reactors, components etc by private players over the long term.
Challenges and Concerns
Technology Risks
- Concerns over dilution of NPCIL’s control over technology choice for power plants built by private players. Need to ensure use of best available technologies.
Safety Standards
- Questions over the ability of private companies to match the high safety standards as followed by NPCIL and whether adequate regulatory oversight capacity exists.
Security Concerns
- Risk of diversion of nuclear materials by private entities to non-peaceful purposes through fuel cycle facilities and need to address this.
Financial Viability
- High nuclear power costs and tepid electricity demand may affect financial viability of nuclear power plants hampering private investments.
Recommendations
Key Recommendations to Address Challenges
| Issue | Recommendations |
| Technology Risks | -Mandate majority NPCIL ownership for foreign reactor vendors entering India while local private players can have higher ownership. -Create high level government panel to vet reactor technologies. |
| Safety Standards | -Develop robust, license based safety regulations for private nuclear operators. -Independently audit safety protocols before granting licenses. |
| Security Concerns | -Stringent security clearances for personnel of private companies. |
| Financial Viability | -Ensure long term Power Purchase Agreements (PPAs) by distribution companies to assure power demand. |
Recent Developments
- In January 2024, the NPCIL indicated 5 potential sites to set up nuclear plants through public-private partnerships, expected to be finalized by mid-2025.
- Sites are – Gorakhpur Haryana, Bhimpur Madhya Pradesh, Mahi Banswara Rajasthan, Kaiga Karnataka and Chutka Madhya Pradesh.
Geopolitical Impact
- This policy will support the Modi government’s self-reliance goals amid growing efforts to decouple from reliance on Russia post the Ukraine conflict.
- India aims to indigenize manufacturing of critical nuclear power equipment like reactors with private sector participation. Reduce import dependence on Russia.
- However, Russia is still seen as an important partner for supplying nuclear fuel and technology collaboration.
Environmental Impact
- Expanding nuclear power in parallel to renewable energy will be key for India to meet its COP26 climate targets – achieve net zero emissions by 2070.
- Compared to fossil fuels, nuclear causes negligible greenhouse gas emissions and air pollution during operations. Vital for clean energy transition.
Allowing private participation in nuclear power has risks but offers potential benefits too for India’s green energy agenda and self-reliance goals. With the right policy framework that balances both private enterprise and sufficient checks and oversight, this can boost India’s civilian nuclear power sector without compromising safety or security aspects.
