In today’s Finshots, we look at the draft laws that could crack open one of India’s most tightly regulated sectors – nuclear energy.

The Story

Back in 1954, Dr. Homi Bhabha – often recognised as the father of India’s nuclear programme – came up with a three-step process for India to achieve energy independence. 

His idea was to build an atomic energy system that could ultimately run on thorium — a metal found in abundance in Indian soil. But you see, thorium isn’t a fuel you can directly use in a reactor. You have to convert it into another material called uranium-233, which is a fissile substance. Meaning it can sustain a nuclear chain reaction and produce energy. So Bhabha came up with a clever workaround and here’s how the plan looked:

Step 1: Use ‘heavy water reactors’ to extract power from natural uranium, while generating plutonium as a byproduct.

Step 2: Feed the plutonium from step 1 into ‘fast breeder reactors’ to create Uranium-233 – a synthetic, radioactive version of natural uranium.

Step 3: And finally, once there’s enough Uranium 233 from Step 2, use it to fuel thorium-based reactors. This being the most crucial step.

So yeah, the entire plan was like growing a self-sustaining nuclear tree. Starting with seeds of imported uranium, then branching out with domestic plutonium and finally getting loads of energy through thorium. Clean, indigenous and strategically independent.

However, over 70 years later, we only have 18 heavy water reactors, 1 fast-breeder reactor (which still isn’t fully operational), and 0 thorium-based reactors. 

And we can’t help but ask — Why wasn’t this goal achieved and why is thorium such a big deal? After all, other types of reactors are easier to build and experts argue that they’re safer to operate.

While this may be true, it misses one important factor. 

You see, traditional heavy-water reactors rely heavily on enriched uranium, which India had to import. And global suppliers were not always keen on sending this over. Thorium, on the other hand, is abundantly available in the country. In fact, India holds over 25% of the world’s thorium reserves. This is why thorium reactors are considered the holy grail of indigenous energy security.

But even though we realised this 80 years ago, why have we not built enough infrastructure yet?

Well, for starters, India’s nuclear energy programme had quite a few setbacks.

Lal Bahadur Shastri and Dr. Homi Bhabha, two of the strongest proponents of nuclear advancement in India, passed away within days of each other. While Shastri ji, as the Prime Minister, was committed to pushing India’s nuclear capability forward, Dr. Bhabha was the brain behind the project. And their sudden deaths left a leadership vacuum that was rather hard to fill.

On top of that, India’s post-independence years were largely influenced by socialist policies. This meant most industries, including atomic energy, were in the hands of the government. This brought in layers of bureaucracy, red tape and inefficiencies that stalled progress. Even today, atomic energy is one of the only few industries completely owned and operated by the government.

But that might change in the near future.

Because India has an ambitious target to build 100 GW of atomic energy capacity by 2047. That’s a 12x jump from today’s 8 GW. And this needs serious policy changes from the highest level.

Which is why the government is now considering amendments to the Atomic Energy Act of 1962. A law that has so far kept the entire atomic-energy value chain strictly under state control. But if this changes, it could unlock immense value in this industry.

Let us explain the two major changes on the horizon.

First, there’s the amendment to limit the liability of equipment suppliers in the case of a nuclear accident. Under current laws, if something goes wrong, like a reactor leak or meltdown, suppliers could be held responsible. And they have an unlimited liability. And this was the reason that scared off global firms such as America’s GE-Hitachi and Westinghouse, and France’s EDF back in the 2010s.

But under the new rules, the financial liability would be limited to the value of the contract within a specified time period. This makes the deal less risky for suppliers.

Second, and more importantly, this amendment aims to open up nuclear generation to private Indian companies and even allow a foreign direct investment up to 49% in future nuclear projects. If passed, this would effectively end the monopoly of the NPCIL (Nuclear Power Corporation of India Limited) and allow players like Adani, Tata and L&T to enter the arena.

And we see the appeal. If India is serious about decarbonising the electrical grid and phasing out coal, then nuclear energy must be a core part of our energy mix. After all, atomic energy is the only type of renewal energy whose output we can control. Solar energy needs sunshine, windmills need the wind to blow and tidal energy needs strong currents in the ocean. 

Even the 2025-26 Union Budget is betting big on nuclear, placing it at the heart of India’s future energy mix. But today, nuclear energy contributes just 3% to our total power generation. And this number can increase only if we have large-scale investment and faster construction timelines. Exactly what the private sector can help with.

But it’s not all rainbows and sunshine. There are two big risks we need to talk about.

First, there’s safety. Private companies are naturally motivated to make profits. But if this motive leads them to cut corners, especially when it comes to safety, it’s not worth the risk. By capping supplier liability, the burden of major accidents could fall on us, the taxpayers.

Take the Bhopal Gas Tragedy, for instance. Legal loopholes and lax accountability left victims waiting for justice for decades. And unlike the regular power sector, nuclear accidents have irreversible as well as long lasting consequences.

Next, there’s the matter of sovereignty. Allowing foreign entities into such a sensitive sector raises questions about the reliance on them. Not just for technology transfer or uranium supply until we build thorium-based reactors, but for geopolitical reasons. 

In fact, earlier this year, PM Narendra Modi met the US Vice-President JD Vance in Paris for what looked like a friendly chat, but the White House later confirmed in its press conference that Washington is keen to funnel “clean, reliable US nuclear technology” into India’s power mix, pitching it as a way to help diversify our energy basket.

That invitation carries clear advantages: access to deep pockets, proven reactor designs and decades of operating experience. But this partnership also creates interdependence. If a sizeable slice of new reactors, fuel contracts or software updates ends up tied to American vendors, a future diplomatic spat could make routine maintenance or licensing renewals trickier than they need to be.

So there you have it, folks. Homi Bhabha’s vision of energy independence, powered by India’s own thorium reserves, remains as compelling today as it was over 70 years ago. But turning that vision into reality demands capital, innovation and the best minds in the country working on it. Things that private companies can bring in spades.

However, it shouldn’t be done without tight safety regulations and transparent oversight. Because the cost of a single misstep could be catastrophic.

Until then…

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