Budget 2025: Can Nuclear Energy Mission Supercharge India’s Green Transition?

As finance minister (FM) Nirmala Sitharaman stepped into the Parliament to deliver the Budget 2025-26 speech, little did anyone expect that she would come bearing gifts for India’s nuclear energy space. 

In her speech, the FM announced the establishment of a Nuclear Energy Mission with an outlay of INR 20,000 Cr. Under the Mission, the government will spearhead research and development (R&D) into at least five indigenously-developed small modular reactors (SMRs) by 2033. 

Small modular reactors are capable of generating up to 300 MWe (megawatt electrical) of electricity per unit, about one-third of the output of traditional nuclear power plants. SMRs are also smaller, safer and modular compared to conventional reactors. 

The FM also said that the Centre will “take up” amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act.

“Development of at least 100 GW of nuclear energy by 2047 is essential for our energy transition efforts. For an active partnership with the private sector towards this goal, amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act will be taken up,” said Sitharaman.

The two legislations, which govern the highly-regulated Indian nuclear space, include provisions for prompt compensation to victims and regulate the supply of radioactive materials. While more details are yet to surface, the amendments could potentially liberalise the sector and pave the way for more startups to enter the nuclear race. 

Commenting on the development, deeptech-focussed Speciale Invest’s managing partner Vishesh Rajaram said that the amendments will encourage private participation in a big way.

“Government’s initiative of “Nuclear Energy Mission” has a substantial allocation of INR 20,000 Cr dedicated towards R&D along regulatory amendments encouraging partnerships between public and private sectors. We firmly believe that such proactive measures pave the way not only to ensure the nation’s safety but open avenues for collaborative innovation amongst stakeholders ultimately leading to prosperity and sustainability!” added Rajaram.

Fusion energy startup Anubal Fusion’s founder Pravin Kini termed the Mission ”renaissance” and a step towards ushering India into the “Nuclear Age”.

“While it (nuclear space) requires large amounts of patient capital, the government has at least shown the private sector the way forward. This, coupled with proposed amendments, will definitely start some conversations and prompt deeptech-focussed funds to look for founders that are doing something in this area,” said Mayuresh Raut, cofounder and managing partner at Seafund.

On the flip side, Unicorn India Ventures’ founder and managing partner Anil Joshi believes that the Indian startup community may not benefit much from the Nuclear Energy Mission. He told Inc42 that the space is plagued by issues such as heavy capex requirements and regulation, and the Mission would at best “indirectly” help startups. 

While it remains to be seen what the future holds, let’s understand what exactly SMRs are.

What Are Small Modular Reactors?

Around since the 1950s, SMRs were first designed for military use to power aircraft carriers and submarines. Unlike bulky nuclear reactors, SMRs are compact and modular, and are designed to be manufactured in factories and shipped to operational sites. 

This enables quicker installation and lower construction costs versus larger reactors. Additionally, small modular reactors are scalable and additional units can be easily added to address energy demands.

As per an industry insider, while conventional nuclear reactors take more than a decade to operationalise, SMRs, depending on the size, could be rolled out of assembly lines in less than three months. 

SMRs are designed to be safe and have enhanced safety compared to earlier nuclear reactor designs, thereby lowering the risk of accidents. In terms of size, while a conventional nuclear reactor plant requires land in excess of 50 acres, SMRs could be as small as one-tenth of a traditional nuclear power plant.

So, why is the Indian government pushing the pedal on fostering the homegrown nuclear ecosystem? It has largely to do with the Centre’s bid to decarbonise India and shows a clear policy shift towards nuclear power in the long-term for meeting base load as an alternative to fossil fuel based thermal sources.

The Mission is also expected to pave the way for development of indigenous technology, job creation, more investment and accelerated growth in the nuclear segment. 

However, the government has been working on the plan for some time now. During last year’s budget speech in July, FM Sitharaman proposed plans to develop a 220 MW Bharat Small Reactor (BSR) in partnership with private conglomerates. A month later, reports surfaced that Tata Consulting Engineers was working with the Department of Atomic Energy (DAE) on the BSR project, with plans to deploy 40 to 50 of these new reactors over the coming decade.

Subsequently in January 2025, nuclear power operator NPIL issued a request for proposals (RFPs) from ‘visionary Indian industries’ to finance and build the proposed 220 MW BSR. 

Notably, it is the ongoing GenAI boom which was potentially one of the reasons for the latest nuclear push by the Centre.

Use Cases Galore, From GenAI To Spacetech

Big tech giants like Microsoft, Amazon, Apple, Google, and Meta are splurging heavily on building data centres, especially “hyperscale” data centres that are massive in size and have well-suited for data-intensive tasks such as generating AI responses. However, they guzzle huge amounts of electricity, and invariably entail heavy cost. 

To tide over this, these companies are now either reviving existing nuclear power plants or developing next-generation nuclear reactors as nuclear energy costs a fraction and is “green”. The Indian government too appears to have taken a leaf out of their play book. 

As many data centre companies make a beeline for India, local authorities are pushing the pedal on developing indigenous nuclear technologies to cater to growing power needs of data centres. And SMR seems to be a safe bet. 

“… I think the requirements for powering data centres for India’s AI forays would have certainly played a role, even if a small one, in opening up the nuclear sector to SMRs. This could give impetus to the budding players in the ecosystem and address India’s energy needs,” said Seafund’s Raut. 

He said that SMRs could also have applications in the spacetech sector, adding that compatible, mobile and fail-safe modular reactors could be used to light up future missions like a human base on the moon.

The industry insider cited above said that SMRs could also have use cases in the defence sector and could be leveraged to power locally-built jets and submarines. 

So now, the question is if Indian startups can step up to the occasion and create a revolution in the nuclear arena?

Can Indian Startups Rise Up To The Nuclear Challenge?

Being a heavily regulated space due to concerns such as national security and radioactivity, there are very few players in the Indian nuclear ecosystem. While Anubal Fusion claims to be the first Indian startup that is working to develop nuclear fusion technology, Hylenr claims to have developed the world’s first cold fusion technology to generate clean energy and built a patented low energy nuclear reactor (LENR) device.

So, besides regulation, what’s holding India’s nuclear ambitions back? It has much to do with issues related to heavy capex and “patient” capital requirements. For context, a capital investment of about INR 500 Cr to INR 1,500 Cr would be needed to operationalise an SMR (not a prototype version).

Then, there is also the issue of lack of expertise. An executive at a deeptech fund, on the condition of anonymity, said that founders in the segment have to have extensive domain knowledge, qualification and experience – all of which are difficult to come by. The person added that most experienced professionals in the space are either working with the NPCIL or in the US, and it is difficult to poach them in either cases. 

To tackle this challenge, startups will have to continue focussing on R&D and offer a unique selling proposition for VCs to back them. 

Meanwhile, Raut said that talent crunch is a sectoral problem and is just not limited to India. 

“The government has set the ball rolling and it will unshackle the system from red tape. We are hopeful that the government has a playbook for the nuclear sector, just like it had for spacetech in 2016-17, because it is the need of the hour and we are still at the mercy of imports for key commodities,” added Seafund’s Raut. 

For Anubal’s Kini, the real test for the Indian nuclear startup ecosystem lies in building systems that utilise fusion technologies and thorium, which is available in abundance in the country and can’t be easily used for making weapons.

That said, while it is still early days for India’s nuclear ambitions, all eyes will now be on whether the world’s third-largest startup ecosystem can step up to the occasion and fulfill the country’s energy needs.