Last week, India's parliament approved legislation that opens nuclear power generation to private and foreign companies.

The landmark Atomic Energy Act marks a significant government shift as India moves towards increased nuclear energy and reduced dependence on fossil fuels in order to meet climate targets.

India is seeking to boost its nuclear power capacity tenfold to 100 gigawatts by 2047, which would be enough to power nearly 60 million Indian homes annually and is essential to achieving carbon neutrality by 2070.

Reaching this target requires around 20 trillion Indian rupees ($226 billion, or €193 billion) in investment that the new legislation aims to unlock from private sources.

Indian Prime Minister Narendra Modi said it "marks a transformational moment for our technology landscape" and also opens "numerous opportunities" for the private sector.

Major Indian conglomerates, including Tata Power, Adani Power and Reliance Industries, have already signaled their interest in entering the country's tightly controlled civil nuclear power sector. 

Nuclear reform spurs safety concerns

Alongside the government optimism, many experts warn of potential challenges, ranging from liability caps and regulatory oversight to safety standards, which could complicate India's nuclear power ambitions.

Ajay Bisaria, a former Indian envoy to Pakistan, said the legislation removes the legal barriers that kept US and French companies out since 2010, enabling India to diversify beyond Russia.  

"This reform moves India-US nuclear cooperation from political signaling to commercial reality. Joint statements on large reactors and SMRs [small modular reactors] can now translate into actual projects, with improved Indo-US relations expected in 2026 providing further momentum," Bisaria told DW.

"Licensing timelines, localization requirements, nuclear material safeguards for imported fuel, financing constraints and questions about regulatory capacity are issues."

US interest questioned in India's nuclear shift

Opposition parties have alleged India's new legislation — dubbed "SHANTI" (meaning "peace" in Hindi), an acronym for Sustainable Harnessing of Advancement of Nuclear Energy for Transforming India — was expedited to meet US demands. 

The Indian reform coincides with US President Donald Trump signing the National Defense Authorization Act (NDAA) on December 18.

The NDAA, a sweeping defense policy bill, includes provisions mandating a joint US-India consultative mechanism to align New Delhi's domestic nuclear liability rules with international norms. 

India balances safety with investment push

Jairam Ramesh, a senior member of India's main opposition Indian National Congress party, claimed that recent changes to the country's nuclear liability framework were pushed through Parliament to align domestic law with US interests.

The Indian government maintains that the country's energy security needs and clean energy commitments are driving the nuclear reform. 

Sameer Patil, director of the security, strategy and technology center at the Observer Research Foundation, a think tank, said that the policy shift is a necessary structural reform to unlock private investment for India's nuclear ambitions.

"However, there are several challenges, such as the lack of indigenous supply of fuel supplies being a chief concern. This makes the sector and country vulnerable to vagaries of geopolitics," Patil told DW.

"The question of safety and oversight, frankly, in my opinion, is a trade-off between incentivizing commercial participation and imposing reasonable safeguards."

Patil noted the nuclear legislation's current provisions may seem inadequate given the possible damage from a nuclear accident, but they are sufficient to keep private companies interested in India's nuclear expansion plans.

Skepticism over private sector role

However, a government official familiar with the nuclear sector, speaking on condition of anonymity, expressed skepticism.

"India's nuclear industry has consistently missed targets, and the private sector's track record of abandoning high-risk ventures like gas and hydro raises questions about sustaining capital-intensive nuclear commitments with weakened liability protections," the official told DW. 

Anil Wadhwa, a former diplomat with extensive experience in nuclear and disarmament issues, told DW that India faces implementation challenges to realize its ambitious goal.

"Supply-side issues include poor domestic uranium quality, the need for skilled workforce development, and insufficient manufacturing capacity for reactor components," said Wadhwa.

Safety caps and supply gaps under fire

Wadhwa said that debates were continuing around critical issues.

"Whether liability caps of 15 billion Indian rupees ($168 million, €143 million) are adequate for major accidents, whether the regulatory body, Atomic Energy Regulatory Board, has sufficient independence from government, and how to properly balance commercial incentives with safety standards," queried Wadhwa.

Japan's Fukushima disaster in 2011 cost over $200 billion in cleanup and compensation, more than 1,200 times India's proposed liability cap.

The Chernobyl accident's total economic impact exceeded $700 billion when accounting for long-term health costs, evacuations, and contaminated land loss.

For foreign companies, Wadhwa said, India's earlier Civil Liability for Nuclear Damage Act (CLNDA) of 2010 allowed operators to sue suppliers for equipment defects, unlike global norms where only operators bear liability.

"This law fundamentally reforms this by aligning closer to international standards," said Wadhwa.

"Foreign ownership is capped at 49% with operational and licensing requirements, but the bill creates participation pathways that did not exist before, which marks significant progress from the previous restrictive regime." 

Edited by: Keith Walker