India’s INR 20,000 crore (USD 2.31 billion) nuclear mission — announced by Finance Minister Nirmala Sitharaman during the Union Budget in February 2025 — aims to develop 100 GW of nuclear energy by 2047, focusing on Small Modular Reactors (SMRs) with a target of five operational units by 2033.
While the initiative offers a much-needed boost to the sector, certain challenges remain about nuclear power’s role in India’s future energy mix.
Nuclear power’s role in India’s energy future
In a panel discussion of India Energy Week 2025, India’s Petroleum and Natural Gas Minister Hardeep Singh Puri acknowledged nuclear power’s efficiency and cost-effectiveness. However, he stressed that nuclear energy requires a specific route to expand successfully in India.
“Nuclear (power) provides an efficient cost-effective thing, but you have to go to a particular route and I’m sure that this is going to be a discussion point in major wherever such discussions take place. I see that happening,” Puri said on Tuesday, February 11, the inaugural day at the third edition of the government of India’s flagship energy event, currently ongoing in the national capital.
Karthik Ganesan, Fellow and Director of Strategic Partnerships at the Council on Energy, Environment and Water (CEEW), highlighted that the INR 20,000 crore allocation for the nuclear mission provides a much-needed boost for the sector, which has struggled with consistent funding.
Speaking to Connected to India’s Sudipto Maity, Ganesan said, “This nuclear energy mission outlay provides a shot in the arm for a sector that has not received consistent funding, despite being one of the older nuclear programmes in the world.”
“The R&D efforts needed for an indigenous modular reactor are significant and the 2033 timeline for 5 reactors would put it as one of the fastest to market.”
Ganesan said India would benefit from international collaboration to accelerate the development. “Learning from what other countries have done would also be a welcome step,” he told CtoI.
Small Modular Reactors: Challenges remain
Ganesan, however, was less optimistic about the Bharat Small Reactor (BSR) concept. “Now, I would think that this Bharat small reactor concept, which is basically what has been touted in the finance minister’s speech, is really rehashing our old nuclear programme to different sets of stakeholders other than NPCIL (Nuclear Power Corporation of India), getting them to pay for it. And branding it as, this is nuclear for you,” he said while appearing on The Hindu’s In Focus Podcast a few weeks ago.
Discussing the potential commercial expansion of nuclear power, Ganesan also critiqued the Request for Proposal (RFP) issued by the Nuclear Power Corporation of India (NPCIL). The RFP, in Ganesan’s view, unfairly placed the financial burden on private players without offering them adequate incentives. He explained that, under the RFP, private investors would need to fund the project and pay NPCIL a fee, leading to an uncompetitive pricing model compared to other energy sources, like coal or renewable energy.
The power plant would require all users to fund the project and handle most of the responsibilities, he said. Additionally, they would pay NPCIL a fee of 60 paise per unit for operating the facility, in addition to contributing the capital expenditure.
For instance, in the case of a 220-megawatt unit, the current tariff for supplying electricity to the grid is around 3.4 rupees. If the new nuclear plant charges the same price of 3.4 rupees per unit, adding the 60 paise fee would raise the cost to 4 rupees per unit, potentially reaching 4.1 rupees depending on other factors.
“Now, at 4.1 rupees a kilowatt hour, it is already really expensive power as far as the captive unit is concerned, because most of the units that are currently there, the coal-based units that are there, the cost of coal and the electricity rates for the industrial units are significantly lower. Because the capex in some sense has already been paid for, for many of the units. And or rather it is either amortized or it is a sunk cost right now, right. So, now, the variable cost is probably as low as one and a half rupees or two rupees.
“So, RE (renewable energy) plus storage at these tariffs at probably 4 rupees. But RE plus storage, renewable energy plus storage is falling. Nuclear, if, you know, if all the builds go on time, and there is no sort of supply chain delays, you may get to this 4 rupee tariff. Hopefully, they will not run into issues like the way NPCIL does in terms of, schedule fallouts, where in order to recoup the schedule, you have to end up spending a lot of money, and the cost escalation is significant.
This interview broke the internet in India ! On BBC #HARDtalk, a combative and articulate 🇮🇳Petroleum and Natural Gas Minister Hardeep Singh Puri fiercely defended India’s strategic autonomy, energy security policy, economic priorities and democratic framework.
— JahansherFirozeChoudhury (@Jahansher) February 10, 2025
He tore through… pic.twitter.com/VWreOduLfi
“Hopefully, when a private sector entity is financing it, all of those bottlenecks will not be there, and they can keep to the schedule.
“So, if they manage to do it, then maybe you’ve got a competitive solution. So even from the get-go, it feels like the BSR is already a very economically not so attractive solution given that the cost declines for RE plus storage are significant,” he added.
While acknowledging that nuclear power could eventually offer a competitive energy solution, Ganesan argued that India should explore alternative financing models for large-scale nuclear installations, citing France and China’s more successful approaches. He stressed the importance of scaling up with larger units of around 1,200 to 1,350 MW to achieve better economies of scale.
