India’s ambitions to break into the SMR value chain – the three big enablers in the Budget

The first step is the creation of a separate vertical within the Department of Atomic Energy with the explicit objective of fostering private participation in what is now an overwhelmingly state-controlled Indian nuclear establishment. This would be on the lines of what was tried out in the space sector, which is now proving to be a resounding success. The exercise would be aimed at tapping the SMR design and fabrication potential, since private players are seen as far better positioned at negotiating the terms of the future tech transfer deals with global companies that are leaders in this area, absorbing technology and manufacturing these new-age light water reactor-based projects.

The second is a proposed amendment to the Atomic Energy Act, 1962, which currently allows only limited participation for the Indian private sector players in the country’s nuclear energy sector and limits this to private companies coming in only as suppliers of equipment. The proposed changes are aimed at opening the door wider for the private sector for an entry into nuclear power plant operations and enabling them to enter the SMR sector as operators, which is currently allowed under the Act to state-owned Nuclear Power Corporation of India Ltd. (NPCIL) and a couple of joint ventures that NPCIL has with state-owned companies such as NTPC Ltd and NALCO.

The third is likely changes being moved to the Civil Liability for Nuclear Damage Act, 2010. The original legislation sought to create a mechanism for compensating victims from potential damages caused by a nuclear accident, and allocating liability and specifying procedures for compensation. These provisions have been cited as an impediment by foreign players such as GE-Hitachi, Westinghouse and French nuclear company Areva to investing in India, primarily on the grounds that the legislation channelised operators’ liability to equipment suppliers. Foreign vendors have cited this as a disincentive when it comes to investing in India’s nuclear sector amid apprehensions of incurring future liability.

“The entry of private players has been a resounding success in space. The idea of a nuclear vertical essentially involves carving-out a dedicated space within India’s nuclear establishment to open the doors wider for private players. There is no question that the private sector players are in a better position to negotiate and execute ventures with foreign companies that are keen to participate in India’s atomic energy sector,” a senior government official said. Some private players are already learnt to have shown interest in deploying these small reactors at their captive site. Since the talks are sensitive, sources said disclosing names may not be appropriate at this stage.

Triggers for the Move

There are two triggers for this policy push that was outlined in Budget 2025-26. One, amid a scaling down of coal-fired generation as part of the overall energy mix and an increase in renewable capacities, a number of countries — including India — are looking at scaling up of nuclear energy to meet the demand for base-load power. While renewables capacity addition in India has sharply surged over the last ten years, there are multiple hurdles that green power poses. Nuclear offers a practical solution, especially since the grid needs new electricity sources for both base load and variable demand peaks. Nuclear generation offers a relatively clean, round-the-clock power source that can tide over the limitations of renewables – not generating power when the sun’s not shining or the wind is not blowing. This is important given that there are not enough viable storage options currently to tide over these shortfalls that renewable power faces.

Two, India is hoping to pitch itself as a credible alternative to the incumbents in this niche field of SMR design and manufacturing, riding on its strong track record of having operated small-sized reactors (heavy water based) over an extended period of time and the ability to manufacture nuclear reactors cost-effectively, and at scale. This also comes at a time when China is working on an ambitious plan to seize the opportunity of global leadership in the SMR space, unlike large reactors where that country has been a latecomer. Like India, Beijing is seeing SMRs as a tool of its diplomatic outreach in the Global South and that the country could shake up the SMR industry, just as it has done in the electric vehicle sector.

The SMR Potential

SMRs — reactors with a capacity of 30MWe to 300 MWe per unit — are increasingly seen as important for nuclear energy to remain a commercially competitive option in the future. India is pushing for a leadership slot in this small reactor space, both as a way of fulfilling its commitment to clean energy transition, and bundling SMRs as a technology-led foreign policy pitch.

India’ Department of Atomic Energy is in exploratory talks with Holtec International, based in Camden, New Jersey – a privately-held company that is now billed as one of the world’s largest exporters of capital nuclear components – for possible collaborations.

Currently, two SMR projects have reached the operational stage globally. One is an SMR named Akademik Lomonosov floating power unit in Russia that has two-modules of 35 MWe (megawatt electric) and started commercial operation in May 2020. The other is a demonstration SMR project called HTR-PM in China that was grid-connected in December 2021 and is reported to have started commercial operations in December 2023. There are multiple Western companies that are in various stages of getting certifications for their SMRs, including Holtec International’s SMR-300, the Rolls-Royce SMR, NuScale’s VOYGR SMR, Westinghouse Electric’s AP300 SMR and GE-Hitachi’s BWRX-300.