India Considers 49% Foreign Stake in Nuclear Plants to Boost Capacity

India is considering allowing foreign companies to hold up to 49% stake in its nuclear power plants. This move is part of a broader plan to open up one of the most tightly controlled sectors in the country, aiming to reduce carbon emissions and increase nuclear power capacity.

Since 2023, the Indian government has been exploring changes to its foreign investment framework in the nuclear energy sector. The urgency to increase nuclear power capacity has grown as India seeks to replace carbon-intensive coal with cleaner energy sources.

Investment in this sector could potentially drive negotiations with the United States on tariffs, although officials have not clarified whether this issue will be linked to any trade agreements. In 2008, a civil nuclear agreement between India and the United States paved the way for multi-billion-dollar deals with American companies. However, concerns over unlimited liability in case of accidents and India's previous restrictions on foreign investment in nuclear power plants deterred these companies from proceeding.

If the latest proposal is approved, along with plans to relax nuclear liability laws and allow domestic private enterprises to enter the sector, these measures could remove obstacles and help the government achieve its goal of increasing nuclear power capacity to 100 gigawatts by 2047, a twelvefold increase from current levels.

Any foreign investment in the nuclear sector would still require prior government approval and would not be automatically permitted. The necessary legal amendments could be submitted to the federal cabinet soon, with the government aiming to pass amendments to the 2010 Civil Liability for Nuclear Damage Act and the 1960 Atomic Energy Act during the parliamentary monsoon session in July.

The amendments to the Atomic Energy Act would allow the government to issue licenses to private companies, enabling them to construct, own, and operate nuclear power plants, as well as mine and manufacture nuclear fuel. Currently, under government control, India's total nuclear power generation capacity is slightly above 8 gigawatts, accounting for just 2% of the country's installed power capacity.

As India looks to reduce its reliance on coal, it is exploring the use of nuclear energy to supplement wind and solar power, which are more variable and less reliable during peak nighttime demand. Foreign companies, including Westinghouse Electric, GE-Hitachi, Electricite de France, and Rosatom, have expressed interest in participating in India's nuclear power projects as technology partners, suppliers, contractors, and service providers.

Indian conglomerates such as Reliance Industries, Tata Power, Adani Power, and Vedanta Limited have also discussed plans with the government to invest approximately $260 billion in the nuclear energy sector.