India’s Nuclear Reset: Why Opening the Door to Private Power Comes with High Stakes

Nearly two decades ago, India made a bold promise to itself — and to the world — that nuclear power would anchor its long-term energy future. The 2008 India–US civil nuclear agreement was meant to end decades of isolation and unlock global capital, technology and expertise for India’s nuclear sector. Instead, it became a story of political courage followed by policy paralysis. With Parliament now passing a law to open nuclear power to private and foreign participation, India may finally be attempting a reset. Whether it succeeds will depend not just on investment flows, but on the state’s willingness to regulate as seriously as it liberalises.

The promise — and disappointment — of the 2008 nuclear deal

The civilian nuclear agreement with the United States was one of independent India’s most consequential strategic decisions. Then prime minister Manmohan Singh staked his government’s survival on it, facing down fierce opposition and winning a confidence vote in Parliament. The expectation was clear: world-class reactors, private-sector efficiency and foreign investment would transform India’s nuclear landscape.

That transformation never came. Liability concerns, regulatory ambiguity and a de-facto state monopoly meant that no major foreign or private nuclear plants materialised. The political capital expended in 2008 yielded little in terms of new capacity, leaving nuclear power stuck at the margins of India’s energy mix.

Why nuclear power matters more today than ever

Nuclear energy today accounts for only about 3 per cent of India’s electricity generation. This might have been tolerable earlier, but it is increasingly problematic in a power system transitioning rapidly towards renewables. Solar and wind are scaling up impressively, but their intermittency raises concerns about grid stability and base-load supply.

New Delhi has now openly acknowledged that the energy system of the future will need firm, non-fossil backup power — and nuclear is one of the few scalable options. The government’s ambition is striking: 100 gigawatts of nuclear capacity by 2047, up from under nine gigawatts today. In effect, India plans to build a reactor fleet comparable in size to that of the United States over the next two decades.

What the new law changes

The legislation passed in December marks a structural shift. It ends the de-facto state monopoly over nuclear power and allows private — including foreign — companies to build and operate plants. More importantly, it aligns India’s liability framework with global norms, addressing the single biggest deterrent that crippled the post-2008 phase.

Globally, liability for nuclear accidents rests primarily with plant operators, not equipment suppliers. India’s earlier approach, shaped by historical trauma, placed expansive liability on suppliers, making projects effectively unfinanceable. The new law recalibrates this balance, offering investors clarity about risk exposure.

The long shadow of Bhopal

Liability reform has always been politically fraught in India because of the 1984 Bhopal gas disaster. Thousands died after a toxic leak at a pesticide plant operated by Union Carbide, a US company. For many Indians, the perception that the company escaped full accountability hardened attitudes toward industrial liability.

This legacy shaped India’s nuclear law for decades. But nuclear energy operates within a globally interlinked ecosystem of technology, insurance and finance. Without conforming to international liability norms, India simply could not attract serious participation. Moving past Bhopal’s shadow was therefore essential — though politically risky — if nuclear power was to become viable at scale.

Private capital, public ambition

The scale of India’s nuclear ambition is immense. Government estimates suggest that reaching 100 gigawatts will require investments of around $217 billion. Domestic capital alone cannot shoulder this burden. Unsurprisingly, interest is already emerging. Reports suggest that large conglomerates, including the Adani Group, are exploring projects such as small modular reactors, with Uttar Pradesh cited as a possible starting point.

But a handful of domestic players will not be enough. Foreign technology providers and financiers will need confidence not just in the law, but in how it is implemented.

Why regulation is the real test

This is where the risks lie. On paper, the new regulatory framework appears robust. In practice, India’s track record raises concerns. Across sectors — from coal and telecom to airports — regulators have often been accused of being too deferential to politically influential corporate groups.

In nuclear power, such weakness would be catastrophic. The stakes are uniquely high: information asymmetries are severe, safety margins unforgiving, and the consequences of failure irreversible. Regulators must have the authority and credibility to delay projects, shut down plants, and publicly challenge even the most powerful business interests.

India has a habit of building sectors first and strengthening regulation later. Nuclear power cannot afford this sequencing error.

The hidden cost of getting nuclear power right

Allowing private capital into nuclear energy will save the state billions in upfront construction costs. But it also creates a new obligation: massive investment in regulatory capacity. Independent laboratories, well-paid inspectors, real-time monitoring systems and institutional autonomy are not optional add-ons — they are prerequisites.

This “startup cost” of governance is often underestimated. Without it, private participation could weaken safety rather than strengthen capacity.

A narrow but historic window

India’s nuclear reset comes late, but not too late. The need for clean, firm power is undeniable, and the scale of ambition reflects a country thinking long term. The new law removes the biggest structural barrier that crippled the promise of 2008.

Whether this moment becomes a genuine turning point will depend on discipline. Liberalisation without regulation would be reckless; regulation without investment would be futile. Doing both together — deliberately and transparently — is the only way nuclear power can finally fulfil the promise India made to itself nearly twenty years ago.