Close on the heels of Prime Minister Narendra Modi’s assertion that the country is in full-fledged “reform express” phase, the Union Cabinet on Friday approved a host of legislative and administrative measures to give a push to different sectors of the economy. The cabinet decisions covered coal to civil nuclear energy and the insurance sector.
A Bill to raise the Foreign Direct Investment (FDI) limit in insurance companies from 74% to 100% got the nod, in what could unlock the sector’s full potential, which is anticipated to grow at 7% annually over the next five years.
The Bill, to be tabled in Parliament next week, is expected to attract stable and sustained foreign investments, enhance competition, facilitate technology transfer, and significantly improve insurance penetration in the country.
FDI Hike to Unlock Insurance Sector Potential
Additionally, the Bill aims to relax current restrictions on the repatriation of dividends and key management personnel for foreign-owned firms, thereby boosting the ease of doing business.However, at least one among the Chairman, Managing Director, or CEO must be an Indian citizen.
The Cabinet also approved the Atomic Energy Bill, 2025 or the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Bill allowing private participants in the nuclear power sector. The move comes amid the country’s plan to add 100 gigawatt of nuclear capacity by 2047.
Further, the Cabinet approved a policy for auction of coal for “any industrial use” and exports. This will allow allocation of coal linkages on auction basis on long-term for any industrial use and exports.
In the Union Budget 2025-26, the government has announced plans to increase private sector participation in setting up nuclear capacities by amending the Atomic Energy Act and the Civil Liability for Nuclear Damage Act.
For this purpose, the government had also announced the setting up of a Nuclear Energy Mission for the research and development of Small Modular Reactors (SMR) with an outlay of Rs 20,000 crore. The government has targeted at least 5 indigenously developed SMRs that will be operationalised by 2033.
The legislation includes core activities such as exploration of atomic minerals, fuel fabrication, equipment manufacturing, and aspects of plant operations. The SHANTI Bill proposes a slew of structural reforms, including an independent nuclear safety authority and a dedicated nuclear tribunal, reports suggested.
“The Bill is critical to align civil nuclear liability for operators and suppliers with international standards to attract global technology providers as well as private investors,” said Anujesh Dwivedi, Partner, Deloitte India.
SHANTI Bill Ushers in New Era for Nuclear Power
Currently, the tariff for nuclear power is governed by the Department of Atomic Energy (DAE), in consultation with the Central Electricity Authority (CEA). However, private sector participation will necessitate governance by an independent regulator (such as CERC), enabling the possibility of competitive determination of tariffs, Dwivedi noted.
“Also, involving the private sector in research and development of nuclear technologies for civil use, such as the development of Small Modular Reactors (SMRs), by allowing the creation of intellectual property rights would be a progressive step and in line with the approach adopted by several developed countries,” Dwivedi added.
Nuclear energy is expected to play a pivotal role in reducing India’s dependence on fossil fuels. The bill is likely to have an enduring impact on the country’s ability to achieve its 2070 Net Zero ambition, analysts say.
The existing Civil Liability for Nuclear Damage Act has deferred private and foreign investors from entering the nuclear sector. Under the new framework, liability responsibilities are however expected to be more clearly defined.
The Central Electricity Authority (CEA) has envisaged investments of Rs 19.28 lakh crore for the country’s nuclear ambitions. It also recommended allowing foreign direct investment (FDI) up to 49% in the sector to enable technology providers and equipment suppliers for India’s nuclear goals.
India’s installed strength of nuclear power is just 8.8 GW. The US has the highest operational nuclear capacity of 100 GW, France (64 GW) and China (58 GW) taking the next two slots.
India has a plan to nearly triple its nuclear power capacity to 22.8 GW by FY32 with 10 plants under construction.
In its roadmap, the CEA suggested a slew of measures including unlocking private sector capital, leveraging domestic technology, and foreign partnerships, while calling for urgent reforms in taxation and liability frameworks to accelerate reactor deployment. It had suggested that under the Civil Liability for Nuclear Damage Act, the liability of suppliers should be capped and reflected in contracts between supplier and operator.
The CEA also said that there should be no civil liability under any other law.
The Atomic Energy Act, 1962 currently does not allow participation of private sector or even state governments. Further, suppliers and potential operators are apprehensive about some of the provisions of the Civil Liability for Nuclear Damage Act, 2010 due to uncertainty about extent of liability.
Out of the 100 GW of nuclear capacity planned, NPCIL and its joint ventures are expected to have a major share of about 54 GW. State run NTPC plans to add 30 GW of nuclear capacity.
Many private players have shown interest in setting up utility scale nuclear power generation capacities including Tata Power and Adani. State-owned NBFCs like REC have also said that it will expand its portfolio in the nuclear segment lending. The private industry has been waiting for the amendment in the Atomic Energy Act.
Tata Power has also said that it is under discussions with many states, including Orissa, Madhya Pradesh, and Gujarat, to identify suitable land parcels for its nuclear power plants.
L&T and Tata Consulting Engineers too are looking at collaborating with Holtec, which has got the US Department of Energy approval for transfer of the flexible and cost-effective small modular reactors (SMR) technology to India while state-run oil marketing company IndianOil also will be entering the nuclear sector sometime in the near future.
“Working on govt-to-govt agreement (bi-lateral or multi-lateral) with countries of interest (i.e. having significant uranium Reserve – Australia, Mongolia, Russia) and pursue Nuclear Suppliers Group waiver/ membership will also be of great help in ensuring uninterrupted fuel supply and energy security,” the CEA had said.