India, US To Jointly Design, Manufacture Nuclear Reactors In India

General Studies Paper -3

Context: The US Department of Energy (DoE) has granted final approval for a US company to design and build nuclear power plants in India.

About

• The India-US civil nuclear agreement was signed in 2007 but took 20 years of negotiations, legal clearances, and regulatory approvals to reach this stage.
• India had insisted on local design and manufacturing of nuclear plants, which the US has now agreed to.
• Amendments to the Atomic Energy Act 1962 also have to be initiated to enable private companies to enter nuclear generation as operators, which is currently restricted to only state-owned companies.

Highlights of the Deal

• Regulatory Approval: The DoE approved Holtec International’s proposal as an American Company, allowing it to transfer SMR technology to three Indian firms: Larsen & Toubro, Tata Consulting Engineers, and Holtec Asia.
• SMR Technology: US and Indian firms will jointly manufacture Small Modular Reactors (SMRs) and co-produce all parts.
• US Condition: The US has placed a condition that the jointly-designed nuclear plants cannot be transferred to other entities or countries without prior written consent.

Significance

• Diplomatic Achievement: The deal strengthens US-India relations and gives India access to advanced PWR (Pressurized Water Reactor) technology, previously limited to government corporations.
• China Competition: The agreement comes as China expands its Small Modular Reactor (SMR) plans, with India and China competing for leadership in the Global South with affordable nuclear technology.
• Private Sector: The deal is also being seen as a major win for India’s private sector, which will gain specialisation and expertise in designing and manufacturing nuclear power plants.

Need for Private Players in Nuclear Sector

• Nuclear Capacity: India’s plans to increase its nuclear power capacity from the current 8,180 MW to 22,480 MW by 2031-32 and eventually 100 GW by 2047.
• Energy Demand Growth: India’s electricity demand is expected to increase 4-5 times by 2047, and nuclear power will help meet base-load demand alongside renewables.
• India’s Targets: To reduce the emission intensity of its GDP by 44% by 2030 from the 2005 level.
  • To achieve 50% cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030.
• Roadmap for 100 GW: A roadmap is being developed with stakeholders, and while challenges remain, achieving the 100 GW target is seen as both ambitious and achievable

Governance

• Recently, Nuclear Power Corporation of India Ltd (NPCIL) has invited requests for proposals (RFPs) from private players to set up Bharat Small Reactors (BSRs).
• NPCIL: India’s nuclear sector is governed by the Atomic Energy Act, 1962, under which only government-owned entities such as NPCIL can generate and supply nuclear energy.
• There has been no private sector involvement in India’s nuclear power sector so far.

Arguments in Favour of Private Sector Participation in Nuclear Power

• Improved Efficiency and Innovation: Private companies bring technological advancements, operational efficiency, and innovation, reducing costs and improving safety standards.
• Increased Investment: Private players attract more capital, helping to address the financial challenges of large nuclear projects.
• Faster Project Execution: Driven by competition and profit incentives, they can complete nuclear projects faster and more effectively compared to government processes.
• Expertise and Global Standards: Private companies will bring global best practices, cutting-edge technology, and expertise to the nuclear industry, improving overall standards.
• Job Creation: It will lead to increased employment opportunities in the nuclear sector, from construction to operations.

Arguments Against

• Safety and Security Risks: Private players prioritize cost-cutting over rigorous safety measures, potentially risking catastrophic accidents.
• Lack of Transparency: They may not be as transparent as public institutions, leading to a lack of accountability in the management of sensitive nuclear technologies.
• National Security Concerns: Involving private entities in nuclear power generation raises concerns about the potential for foreign ownership, control, or influence over critical national infrastructure.
• Limited Regulatory Control: Ensuring strict regulatory oversight of private companies might be challenging, potentially leading to lapses in compliance with safety, environmental, and operational standards.
• Profit Motive Over Public Welfare: Private companies prioritize profitability over public welfare, potentially compromising on environmental protections, worker safety, and the long-term sustainability of nuclear energy.

Way Ahead

• Clear Regulatory Framework: Establish a robust regulatory environment to ensure safety, compliance, and transparency, addressing concerns about accountability and national security.
• Public-Private Partnerships (PPPs): Promote partnerships where the government maintains oversight, while private players handle operations, innovation, and investment, ensuring a balance of interests.
• Gradual Implementation: Start with pilot projects and small-scale initiatives to test private sector involvement, ensuring risk management before large-scale implementation.