India plans for nuclear energy to have a significant share in the country’s electricity mix by 2047. As a medium-term target, the aim is to triple nuclear power generation capacity by 2030, from the current 8.1 GW.
Recently, India’s nuclear power operator, Nuclear Power Corporation of India Limited (NPCIL), invited proposals for the establishment of Bharat small reactors (BSRs) for captive use. As per the proposal, the project is to be constructed by the private player under the supervision and control of NPCIL, and on completion, the assets will be transferred to NPCIL for operating under a long-term comprehensive operations and maintenance (O&M) agreement.
So far, NPCIL is the sole authority in the country allowed to set up and operate civil nuclear plants. Currently, it operates 24 nuclear power reactors at seven sites across the nation, with an installed capacity of 8,180 MW, including 15 pressurised heavy water reactors (PHWRs) of 220 MW capacity. In 2023-24, the 1,400 MW Kakrapar Atomic Power Project Units 3 and 4 (KAPP 3 and 4) in Surat, Gujarat, were added to the country’s fleet of commissioned nuclear
power plants.
Background
Finance Minister Nirmala Sitharaman had, in Union Budget 2024-25, unveiled the plan to open the nuclear power sector to private investment as part of a broader policy on energy transition pathways. A key announcement in the budget was the partnership with the private sector for the deployment of BSRs.
BSRs are 220 MW PHWRs designed for captive industrial use. The government envisions the deployment of 40-50 of these reactors over the next decade, leveraging private sector participation. This initiative aligns with India’s commitment to achieving net zero carbon emissions by 2070 while boosting global competitiveness for domestic industries by reducing carbon-related tax burdens.
BSRs are compact nuclear reactors with a stellar safety record and proven performance capabilities. These reactors are aimed at addressing the decarbonisation needs of hard-to-abate industries such as steel, aluminium, copper and cement. These reactors are expected to not only contribute to sustainability goals but also deliver economic advantages by mitigating carbon taxation, thereby enhancing the global market competitiveness of Indian products.
Details of the proposal
As per the requests for proposal issued by NPCIL, the user (industry intending to set up the BSR) holds beneficial ownership of the entire electricity output generated by the plant, after accounting for auxiliary consumption. While the assets of the NPP are transferred to NPCIL for operational purposes, the user retains the rights over the
electricity output.
The project should be designed to qualify as a captive generating plant under the proposed amendments to the Electricity Rules, 2005. The electricity generated is primarily intended for the user’s captive needs, but any sale to third parties requires tariff approval from the Department of Atomic Energy (DAE) and compliance with applicable regulations. The entire project, including capital expenditure, operating expenditure and decommissioning, will be funded by
the user.
The project life cycle is structured into several phases:
Pre-project phase: In the pre-project stage, the user will initially conduct a preliminary site evaluation of the proposed land to ensure compliance with the Atomic Energy Regulatory Board (AERB)’s site selection guidelines, primarily to avoid rejection. The findings will be shared with NPCIL. Subsequently, the user and NPCIL will sign a non-committal MoU, clarifying that NPCIL bears no financial or other obligations, and all expenses incurred, including manpower costs, will be borne by the user. If the site is deemed suitable, the user will seek state government approval for land reclassification and permission to sublease the land to NPCIL under a long-term lease agreement (99 years or more). Upon state approval, a definitive agreement will be drawn to facilitate land sub-leasing, NPCIL’s role as project proponent for necessary clearances, and indemnification of NPCIL until all approvals are obtained. Detailed site evaluation studies will then be conducted jointly, with all expenses borne by the user. After the site evaluation report is ready, NPCIL will secure approval from the DAE site selection committee, followed by clearances from the Ministry of Environment, Forest and Climate Change and other agencies. Finally, the user will select construction agencies, under NPCIL’s super vision, from an approved vendor list, excluding financial obligations from NPCIL
Construction phase: During the construction phase up to initial fuel loading, an additional agreement will outline the obligations of the parties under the BSR initiative for efficient and timely execution. Contracts for construction will be awarded by the user, selecting contractors or suppliers from a list of approved vendors provided by NPCIL, with NPCIL offering quality assurance services on a reimbursable basis. NPCIL will seek stage-wise approvals from the AERB as per the defined process, with construction managed by user-selected agencies under NPCIL’s supervision. Regulatory requirements may necessitate transferring stage-wise project assets to NPCIL during approvals. Upon completion, the entire asset will be transferred to NPCIL for operation, maintenance and decommissioning under a long-term O&M agreement for a nominal value of Re 1, with all associated costs borne by the user. A tripartite agreement between the user, the DAE and NPCIL will govern the leasing of fuel and heavy water, which the DAE will supply to NPCIL, with all expenses borne by the user. At this stage, the asset will transfer to NPCIL, and commissioning activities will be carried out by NPCIL, irrespective of prior agreements.
Operational phase: During the plant operation phase, a comprehensive agreement between NPCIL and the user will govern operations, including decommissioning, and adhering to AERB regulations and statutory requirements. The NPP is expected to operate at a normative plant load factor of 68.5 per cent, with a proposed revision to 72.5 per cent. The user will bear the O&M and capex charges for safe and efficient operations, including major costs such as en masse coolant channel replacement and en masse feeder replacement. The costs for used fuel management away from reactor facilities, waste management and deuterium oxide upgradation, will also be the user’s responsibility. NPCIL’s expertise fees will start at 60 paise per kWh in 2030-31, increasing annually by 1 paisa. NPCIL, as the operator under the Civil Liability for Nuclear Damage Act, 2010, will ensure compliance via financial security or insurance, reimbursable by the user. The fuel, spent fuel and heavy water will remain DAE property, and electricity generated will be supplied to the user, who must ensure its offtake. Additionally, the user will provide township facilities, including housing, amenities and infrastructure, as agreed with NPCIL.
Decommissioning phase: Decommissioning activities will be conducted in accordance with the Atomic Energy Act, 1962. These activities will be funded through the decommissioning levy imposed on the user, as notified by the DAE from time to time. The maintenance of the fund will be governed by the guidelines issued by the DAE, ensuring compliance with the applicable regulations.
Recent developments in nuclear power
In January 2025, NTPC Parmanu Urja Nigam Limited was incorporated as a wholly owned subsidiary of NTPC Limited. Its objective is to develop nuclear energy for electricity generation, manage nuclear plants, and promote research and development in the sector. NTPC and NPCIL signed an agreement to transfer the Mahi Banswara Rajasthan four-unit nuclear project to their joint venture, Anushakti Vidhyut Nigam Limited (ASHVINI). ASHVINI, approved by the government in 2024, is structured with NPCIL holding 51 per cent and NTPC 49 per cent.
Outlook
India plans to triple its nuclear power capacity by 2031 as part of the government’s vision to enhance clean energy production and reduce carbon emissions. By 2031, the capacity is expected to reach 22,480 MW, driven by the construction of 21 new reactors. Among these, 11 reactors are already under construction and will be operational by 2031, including the 700 MW PHWR at KAPP, Gujarat, which has begun commercial operations. The government’s plan includes constructing a fleet of PHWRs, each with a capacity of 700 MW, to be built in bulk for cost and time efficiency. Additionally, the first indigenous 500 MW prototype fast breeder reactor at Kalpakkam, Tamil Nadu, is
under commissioning.
The deployment of BSRs represents a transformative shift in India’s energy strategy. By harnessing nuclear energy – a cleaner, non-fossil fuel source – industries can significantly reduce their carbon footprint while ensuring energy security. This initiative not only supports India’s environmental commitments but also strengthens its economic resilience in a rapidly evolving global market.
Moreover, the innovative framework of the BSR initiative, which integrates private sector investment within the existing legal and regulatory structures, sets a precedent for future public-private partnerships in the nuclear energy sector.