News and developments
Foreign Investment in Nuclear Energy in India
In this background, in December 2023, the Government of India announced that it has initiated steps to increase the nuclear power capacity of India from 7,480 MW to 22,480 MW by 2032. The press release also mentioned that construction and commission of ten reactors aggregating 8,000 MW is underway in the states of Gujarat, Rajasthan, Tamil Nadu, Haryana, Karnataka and Madhya Pradesh. In addition, pre-project activities in respect of ten reactors accorded sanction by the Government has been initiated which are scheduled for completion by 2032.
The Government has also accorded in-principle approval to set up a 6 × 1,208 MW nuclear power plant in cooperation with Westinghouse Electric (USA) at Kovvada in the state of Andhra Pradesh.
Current legal framework for private/foreign investment in nuclear energy in India
Under the Atomic Energy Act, 1962, as amended (the “Atomic Energy Act”), only the Government has the power to produce, develop, use and dispose of atomic energy “either by itself or through any authority or corporation established by it or a government company.” A “government company” is defined under the Atomic Energy Act as a company in which at least 51% of the share capital is held by the Government. The Consolidated Foreign Direct Investment Policy dated October 15, 2020 issued by the Department for Promotion of Industry and Internal Trade, Ministry of Corporate and Industry, Government of India (the “FDI Policy”) lists “atomic energy” as a sector not open for private sector investments. The FDI Policy also states that a citizen of, or an entity incorporated in, Pakistan is not permitted to invest in the atomic energy sector in India. A press release dated September 16, 2020 issued by the Department of Atomic Energy stated as follows: “The present policy (Consolidated FDI Policy of Government) puts atomic energy in the list of prohibited sectors. However, there is no restriction on FDI in the nuclear industry for manufacturing of equipment and providing other supplies for nuclear power plants and related other facilities.” In May 2023, a government panel set up by think-tank Niti Aayog considered the potential role of small modular reactors (SMRs) and related technologies for energy transition as they offer flexible operations. As per the International Atomic Energy Agency, SMRs are nuclear reactors with a power generation capacity ranging from 30 MW to 300 MW. Key characteristics of SMRs are:-
- they are physically a fraction of the size of a conventional nuclear reactor;
- they are modular, making it possible for systems and components to be factory assembled and transported as a unit to a location for installation; and
- they harness nuclear fission to generate heat for electricity production.