Tariff, technology & FDI: India Inc flags key concerns in draft nuclear rules

The recently released draft rules and regulations for operationalisation of the SHANTI Act to allow private sector participation in nuclear power generation have grey areas when it comes to nuclear power tariff, definition of foreign technology, clarity on foreign direct investment (FDI) in the nuclear sector and exclusion zone of the nuclear plant, said key industry players.

The Department of Atomic Energy (DAE) has invited comments from stakeholders by September 4. The industry welcomed the move as it is key to operationalise the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act, which was passed in December 2025, but sought clarity on key issues to decide the road ahead in their nuclear journey.

Major industry players Jindal Nuclear Power Private Limited, Adani Group, Tata Power, Reliance, JSW and Hindalco, among others, have shown interest in captive nuclear power plants. India has a target of 100GW nuclear power by 2047 from the present 8.7GW.

According to a couple of industry players Business Today spoke with, key issues are licensing of foreign technology, option for FDI, no mention of standard Power Purchase Agreement (PPA), notification of tariff norms, and fixing exclusion zone areas.

Licensing challenge

There is a need for a clear definition of indigenous and foreign technology to remove the structural ambiguity in tech transfer and licensing agreements, says the industry.

The draft rules say that where the design is of foreign origin, it is required to be operational and licensed in its country of origin, with documentary evidence of design certification and of the original developer’s concurrence.

“If the Indian regulator will allow a private developer in India to implement those technologies only when it is operational, then I can apply for the license only after 2034- 35. Across the world, the Small Modular Reactors (SMRs) are in the design stage and operational on an experimental basis. As these will be operational only by 2034-35,” said an executive of a top power sector industry player.

SKV Law offices, as part of its assessment, said that this operational requirement carries a practical constraint for small modular reactors: SMR designs are currently operational only in Russia and China, so foreign SMR technology sourced from any other jurisdiction would not, on the present state of global deployment, meet this test.

The executive of another top industry player also pointed that the draft rules say that the project proponent cannot start the siting work before design approval, which means a delay of around 2 years, while this norm doesn’t exist in the present rules.

Nuclear power tariff

According to the SKV law offices, tariff determination remains open under the new rules, as it says tariff determination for supply of electricity or for other services is likewise deferred under rule 106 of the Rules to a future notification based on the recommendations of a separate committee.

“The Rules provide the funding and financial security mechanics but not the tariff methodology itself,” it says.

According to industry, they can give nuclear power to distribution utilities, make captive use of it, or give it to commercial and industrial users, but there is no clarity on who decides the tariff for different segments.

“There could be somebody that is building a project at Rs 20 crore per megawatt because of that site location, technology, or many other factors, and another developer is making a project at Rs 25 crore per megawatt. And what type of project cost is to be considered for tariff determination, that clarity is not very much there,” said an industry player in the metal sector, looking at nuclear power deployment at large scale.

The DAE has mentioned that a government committee will determine the tariff.

“Compared with thermal power, there are clear Central Electricity Regulatory Commission (CERC) guidelines. Will there be a clear SOP for nuclear power? Nothing is mentioned,” said the spokesperson on the condition of anonymity.

Power Purchase Agreement

The industry says the need for a standard guideline for PPA for nuclear power to be finalised on priority. In case of thermal and other forms of energy, it is clearly given, but so far as nuclear is concerned, there are no clear guidelines on PPA.

“It is the most important point because if I have to take 70% debt from the bank and I don't have any PPA, none of the banks is going to give me money. The PPA is a bankable document and we need super important clarity on this,” explained the official of a mining sector, readying a document for submission to the DAE.

FDI

The DAE is still working on the FDI policy in the nuclear sector, and there has been a series of discussions that have happened with the industry players seeking their view. However, the rules and regulations released by the government have no mention of FDI.

Emphasising an early release of the FDI policy, the industry is of the view, “So as per the FDI policy 2020, there is no substantiation, or there is no comment on the FDI. If someone has to invest in India, some foreign technology partner or foreign player technology partner, finance how much they can invest. If we have to bring the foreign capital into India to reduce my overall cost of capital or working capital or overall cost of debt, it is missing,” it said.

Exclusion zone

The industry has demanded a reduction in the exclusion zone around reactors, both for the smaller reactors of capacity 220MW and large reactors of capacity above 700 MW, from habitation. At present, it stands at 1 km; the proposal is to reduce it to 500 meters. The DAE has said they are already considering it, but the current draft rules do not address it.

The industry says that the DAE has just mentioned that the project proponents have to submit radiation level data, basically calculations, and depending upon that they will take a call.

“Now they will take a call is again, you know, open for interpretation. So they have to clearly specify that for 220 MW, this is the exclusion zone, and for 700 MW, this is the exclusion. It has got a clear bearing on the land required to put up the plant,” says one of the project proponents.