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Big shift in India’s Nuclear Policy
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Context
India is planning a major policy shift by allowing up to 49% Foreign Direct Investment (FDI) in the nuclear energy sector, aiming to boost nuclear capacity, reduce coal dependency, and move toward achieving its 'net zero' carbon emissions target by 2070.
Current Status and Challenges in India's Nuclear Sector
- Government Monopoly and Limited Capacity: India’s nuclear power sector remains a state-controlled monopoly, generating only about 2% of the total installed capacity, with just over 8 GW of power despite the critical need for carbon-free energy.
- Strategic Caution and Legal Constraints: The sector has historically been restricted due to national security concerns and regulatory frameworks such as the Atomic Energy Act (1960) and the Civil Liability for Nuclear Damage Act (2010), discouraging private and foreign participation.
- Supplier Liability Issues: Even after the 2008 India-US Civil Nuclear Agreement, global suppliers remained hesitant due to strict liability laws imposing unlimited exposure risks, severely limiting foreign investment and technology inflow.
Recent Policy Proposals and Their Impact
- Opening Doors to FDI: The new proposal to allow up to 49% FDI marks a significant liberalisation of the sector, aimed at attracting foreign capital and technology to overcome the current investment and innovation stagnation.
- Private Sector Entry and Liability Reforms: Alongside FDI, the government plans to ease nuclear liability laws and permit domestic private players, potentially transforming the nuclear sector into a competitive and vibrant market.
- Strategic Trade Opportunities: Liberalising the sector could offer India a new avenue for strategic trade negotiations, particularly with nations like the United States, strengthening its global nuclear energy partnerships.
Opportunities and Safeguards for the Future
- Scaling up Nuclear Capacity Ambitions: India has set a goal to expand nuclear capacity 12 times to 100 GW by 2047, and large-scale foreign and private investments are seen as essential for achieving this target.
- Building a Nuclear Supply Chain Ecosystem: Opening up the sector presents an opportunity to develop a strong indigenous nuclear supply chain, reducing dependency on imports and ensuring sustainability of nuclear infrastructure.
- Ensuring Sovereign Control and Safety: While welcoming FDI and private participation, it is critical to maintain sovereign authority over nuclear safety, security, and regulatory standards to prevent compromising national interests.
Practice Question
Q. "Opening India's nuclear energy sector to foreign direct investment (FDI) represents both a strategic opportunity and a policy challenge." Critically examine in light of India's carbon neutrality goals and national security imperatives. More Articles
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