India is poised to make a profound change in its nuclear power sector. There are expectations that it will allow greater foreign investments, up to 49%, very soon. The administration’s decision aligns with the country’s strong climate ambition. They want to increase their nuclear capacity to 100 gigawatts (GW) by 2047. According to government sources, talks to change the existing legal frameworks are underway. These proposals will soon be issued to the federal cabinet.
The Indian government plans to push through these reforms in the monsoon session of Parliament that begins in July. This timeline is indicative of a real push to bring in more foreign capital, while speeding up the transition to cleaner energy sources. Since early 2023, chatter has been swirling about changing foreign investment rules in the nuclear sector. All of this points to the administration’s increasingly concerted effort to impose strategic fortification on its energy infrastructure.
Meanwhile, India is on course to dramatically increase its nuclear strike capabilities. Like many of their local counterparts, they hope to grow their capacity by a factor of twelve with this pilot program. Major movers in the Indian energy field, including Reliance Industries, Tata Power, Adani Power and Vedanta, are already lobbying intensely with the government. They still tout a sizable plan investment of some $26 billion in new or upgraded nuclear power projects. Taken together, these recent domestic developments point to an increasing corporate interest in identifying new business opportunities and participating actively in the rapidly evolving nuclear landscape.
Even with these developments, foreign companies have been skittish about jumping into investments. Concerns over unlimited liability in the event of a nuclear accident have deterred many potential investors from committing to projects within India. In response, the government proposes to allow foreign stakeholders to be foreign stakeholders, which should reduce some of the worries. All foreign investments in the nuclear plants still need approval in advance from the Indian government.
The foundation for this change was laid by a historic nuclear deal known as the 123 Agreement, signed between the United States and India in 2008. This deal provided a precedent for mutually advantageous agreements between American companies and India. The government is currently reviewing these amendments. This would have major geopolitical and economic ramifications, in particular India’s burgeoning strategic partnership with the US.