India moves closer to opening nuclear power sector to foreign investment as AEC cleared FDI policy: Official

The Atomic Energy Commission (AEC) has cleared a new Foreign Direct Investment (FDI) policy for the nuclear power sector, marking a significant policy shift ...

What Happened

The Atomic Energy Commission (AEC) has cleared a new Foreign Direct Investment (FDI) policy for the nuclear power sector, marking a significant policy shift toward opening the historically state-controlled sector to private and foreign capital.
The approved policy is now being forwarded for inter-ministerial consultations before receiving cabinet-level clearance, placing it a few procedural steps from formal enactment.
The FDI framework under consideration proposes an initial foreign investment cap of 26%, with provisions for phased increase up to 49%, aimed at mobilising large-scale financing for nuclear capacity expansion.
The move aligns with the SHANTI Act, 2025, which legislatively ended the state monopoly in nuclear power generation established under the Atomic Energy Act, 1962, for the first time allowing private entities to build, own, and operate nuclear plants under regulatory oversight.
The policy supports a national target of scaling nuclear power capacity from the current approximately 8 GW to 40 GW by 2035 and 100 GW by 2047, with an estimated financing requirement of ₹20 lakh crore.

Static Topic Bridges

Atomic Energy Act, 1962 and the SHANTI Act, 2025

The Atomic Energy Act, 1962 established an exclusive government monopoly over all aspects of nuclear power in India — restricting ownership, operation, and related activities to central government entities such as the Nuclear Power Corporation of India Limited (NPCIL). The Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act, 2025, passed in December 2025, repealed the 1962 Act and the Civil Liability for Nuclear Damage Act, 2010, replacing them with a single consolidated framework permitting private sector participation in reactor construction, operation, and fuel fabrication.

Atomic Energy Act, 1962 — reserved nuclear activities exclusively for government companies
SHANTI Act, 2025 passed by Lok Sabha on December 17, 2025
SHANTI Act grants statutory recognition to the Atomic Energy Regulatory Board (AERB) as the independent nuclear safety regulator
Strategic functions — uranium enrichment, heavy water production, and spent fuel management — remain exclusively with the central government
SHANTI Act removed supplier liability and capped operator liability by plant capacity, aligning with international nuclear liability conventions

Connection to this news: The AEC's FDI policy clearance is a downstream regulatory action enabled by the SHANTI Act's legislative opening — converting the statutory permission for private participation into a concrete investment framework.

Foreign Direct Investment (FDI) Policy Framework

India's FDI policy is administered under the Foreign Exchange Management Act (FEMA), 1999 and associated DPIIT Press Notes. Sectors are categorised into automatic route, government approval route, and prohibited sectors. Historically, nuclear energy was in the prohibited/restricted category. Any change in sectoral FDI caps requires inter-ministerial consultation and typically cabinet approval through a Press Note amendment.

FDI policy changes administered by Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce
Phased cap model proposed: initial cap at 26%, potential increase to 49%
Requires Foreign Investment Facilitation Portal (FIFP) route or FIPB-successor approval for government-route sectors
Nuclear Energy Mission (NEM) established with ₹20,000 crore outlay targeting at least 5 indigenous Small Modular Reactors (SMRs)

Connection to this news: The AEC's policy clearance is the first institutional gate in the multi-step FDI policy amendment process, signalling that the nuclear regulator and strategic establishment have reached internal consensus.

Small Modular Reactors (SMRs) and India's Nuclear Expansion

Small Modular Reactors (SMRs) are advanced nuclear reactors with a power output of up to 300 MW(e) per unit, designed for factory fabrication and modular deployment. They offer advantages in scalability, lower upfront capital cost, and suitability for industrial or remote deployment compared to conventional large reactors. India has set a target of operationalising at least 5 indigenous SMRs under the Nuclear Energy Mission.

Current installed nuclear capacity: approximately 8 GW across 22 operating reactors
Interim target: 40 GW by 2035; long-term target: 100 GW by 2047
India's reactor fleet predominantly based on Pressurised Heavy Water Reactors (PHWRs) and Light Water Reactors (LWRs)
Kudankulam Nuclear Power Plant (with Russian collaboration) and Gorakhpur Haryana Anu Vidyut Pariyojana (GHAVP) are among key projects

Connection to this news: Attracting FDI is considered essential to bridge the ₹20 lakh crore financing gap required to scale nuclear capacity, particularly for deploying new-generation SMR technology where private and international capital can supplement government funding.

Key Facts & Data

AEC-cleared FDI cap range: 26% (initial) to 49% (phased)
India's current nuclear capacity: ~8 GW
Target: 40 GW by 2035; 100 GW by 2047
Estimated financing requirement: ₹20 lakh crore
Nuclear Energy Mission allocation: ₹20,000 crore for SMR R&D
SHANTI Act, 2025 passed in December 2025 (Lok Sabha: December 17, 2025)
AERB (Atomic Energy Regulatory Board) granted statutory recognition under SHANTI Act
India's first nuclear plant: Tarapur Atomic Power Station (TAPS), Maharashtra, commissioned 1969