India’s $213bn nuclear power market opens up, raising both expectations and unease

Gradual liberalization since the 2020s
Power and water infrastructure constraints remain unresolved
Administrative risks linger even after opening

India has moved to break a more than 60-year government monopoly on nuclear power generation by passing legislation that allows private participation, clearly signaling its long-term goal of expanding the national power grid. With electricity demand surging amid the spread of artificial intelligence (AI) and data centers, policymakers have concluded that public finances alone can no longer support the scale of infrastructure expansion required. As policy momentum shifts toward attracting private capital and foreign investment, India-specific uncertainties such as administrative delays and permitting hurdles are emerging as key factors giving global investors pause.

Limits of a state-only strategic asset model

According to Bloomberg on the 18th, India’s federal parliament approved amendments to the Atomic Energy Act the previous day, ending the long-standing government monopoly on nuclear projects and opening the market to domestic and foreign private companies. The legislation, which aims to expand nuclear generation capacity from the current 8.8 gigawatts (GW) to 100 GW by 2047—the centennial of India’s independence from British rule—will take effect after being signed by President Droupadi Murmu.

Since commissioning its first reactor in 1969, India has operated 25 nuclear reactors nationwide, all effectively run by the state-owned Nuclear Power Corporation of India (NPCIL). Tightened industrial and environmental regulations following the 1984 Bhopal gas disaster, combined with a legal framework that holds suppliers liable in the event of accidents, had effectively shut out both foreign and domestic private participation. As a result, India was widely seen as unlikely even to meet its existing target of reaching 63 GW of nuclear capacity by 2032.

Calls for liberalization resurfaced repeatedly in the 2020s. Under Prime Minister Narendra Modi’s vision of elevating India to developed-economy status by 2047, rebuilding the stagnating nuclear sector became a shared priority. Government estimates suggest that expanding nuclear capacity roughly elevenfold would require at least $213bn—well beyond what public finances alone could absorb. The decision to open the sector to private players is widely viewed as a pragmatic response to these fiscal constraints.

This is why the move is seen as a “telegraphed opening.” Globally, nuclear power has regained attention as a clean energy source. Japan has restarted reactors, while South Korea, China, and Bangladesh are pushing new builds. Facing the need to reduce coal dependence and accelerate decarbonization, India has concluded that nuclear energy can no longer remain an exclusively state-controlled domain. Bloomberg noted that the shift reflects the convergence of surging global electricity demand driven by AI systems and data centers with India’s nuclear expansion strategy.

Big Tech capital and infrastructure pressure

The push to expand nuclear power is now colliding with immediate constraints in electricity and water supply, as global Big Tech investment flows into India. The country has moved beyond being a “potential” destination for AI and data centers to becoming a concrete investment target. Google plans to build a $15bn AI data center in Visakhapatnam, Andhra Pradesh, with the Adani Group, while Reliance is pursuing roughly $11bn in facilities alongside Brookfield and Digital Realty.

The challenge is that power infrastructure expansion has lagged far behind the pace of announced investments. Credit rating agency ICRA has warned that while India holds about 20% of the world’s data, infrastructure bottlenecks are becoming a central constraint on further investment. According to an October report by Macquarie Research, India’s operational data-center capacity stands at about 1.4 GW, with another 5 GW in the planning stage. Even excluding server costs, expected capital expenditure could reach as much as $45bn.

Electricity demand growth is also testing the government’s response capacity. S&P Global Commodity Insights projects that data centers’ share of India’s electricity demand will rise from 0.8% in 2024 to about 2.6% by 2030. While total national power demand is expected to grow at an average annual rate of 5.3%, data-center demand alone is forecast to expand at roughly 28% a year. This suggests that coal-, hydro-, and renewables-centric grids may struggle to ensure stable supply. Water scarcity compounds the issue: Moody’s has warned that per-capita annual water availability in India could fall from 1,486 cubic meters in 2021 to 1,367 cubic meters by 2031.

The limits facing the Indian government are becoming clearer. This year’s capital expenditure budget was raised to a record level, with a large share allocated to infrastructure such as roads, energy, and urban development. Even so, with AI data centers, manufacturing, and urban infrastructure all competing for electricity, the consensus view is that expanding generation and transmission capacity solely through public resources would impose excessive fiscal and administrative strain. Power instability undermines investment incentives, and stalled investment threatens broader growth strategies—explaining why the government ultimately moved to open the sector.

Persistent administrative and political risks

Despite the sweeping policy shift, chronic administrative delays and the risk of vested interests interfering in implementation remain the largest sources of uncertainty for investors. India offers vast market potential, but also a multilayered decision-making structure. For many global firms, the primary barrier to entry is not competition itself but the complex web of approvals spanning central, state, and local governments. Unpredictable delays and inconsistent regulatory interpretations at the execution stage are seen as critical risks.

Such “administrative risk” is especially pronounced in capital-intensive sectors such as manufacturing, energy, and data centers. In its 2025 India Market Entry Strategy report, KOTRA cited experiences of Korean companies including Samsung Electronics, LG Electronics, and Hyundai Motor, warning that strict tax audits, frequent regulatory changes, and shortages in power and drainage infrastructure pose major risks. Power infrastructure, in particular, varies widely by state, creating large regional disparities in operating costs and risk even for the same company.

Critics argue that India’s infrastructure gaps are not solely a matter of funding. Foreign investors often point to political bargaining and vested interests during land acquisition and local stakeholder negotiations as key variables. A frequently cited case is Tata Group’s Singur automobile plant project (2022–2023), which was relocated from West Bengal to Gujarat after land acquisition disputes, farmer opposition, and political intervention. The episode has since become a cautionary example of land and local-opposition risks in large-scale Indian investments.

As a result, experts broadly agree that despite India’s high growth potential, investment pace and scope must be calibrated carefully. Passage of the nuclear liberalization law marks a clear policy turn, but it is unlikely to trigger a wave of large projects in the short term. Global companies are therefore increasingly categorizing India not as a market for quick returns, but as one requiring long-term, phased engagement. Even after the market opens, lingering uncertainties continue to elevate both expectations and caution toward India’s nuclear and infrastructure ambitions.