India Nuclear Energy Policy: Budget 2026 Signals a Strategic Shift in India’s Nuclear Energy Policy
Finance Minister (FM) Nirmala Sitharaman declared customs tax exemptions on “imports of goods required for Nuclear Power Projects till the year 2035″ in her budget address for 2026–2027, regardless of their capacity. The declaration, which may not sound as dramatic as the one made last year, will undoubtedly have a lasting effect on India’s nuclear energy industry because it allots Rs 20,000 crore for a Nuclear Energy Mission (NEM) to study and create Small Modular Reactors (SMRs).
This is particularly true given the recently passed Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act, 2025, and the anticipated rise in energy consumption brought on by the budget’s tax breaks for international cloud companies that use Indian data center services.
India Nuclear Energy Policy: Zero Customs Duty on Nuclear Imports
The budget lowered the customs tariff from 7.5% to 0% on all items needed for nuclear power generation that have the Harmonized System (HS) codes 8401 30 00 and 8401 40 00. While items classified under Code 8401 40 00 comprise components of nuclear reactors, such as Control and Protection Absorber Rods and Burnable Absorber Rods, products classified under Code 8401 30 00 include non-irradiated fuel elements (cartridges). Under the HS, “fuel elements (cartridges), non-irradiated” is a category of traded goods. Fissile material used in nuclear power generation is contained in metal canisters known as non-irradiated cartridges.
SMRs and Large Reactors: A Dual Path to 100 GW Nuclear Capacity by 204
First, we can infer four things from the FM’s announcement of a customs duty exemption: First, the government wishes to support the domestic nuclear reactor construction sector. Second, the government is dedicated to including nuclear power in its mix of renewable energy sources and is expanding on the NEM. Third, the government’s long-term commitment to the nuclear energy industry is demonstrated by the extension of exemptions’ validity until September 30, 2035.
Fourth, the government is aiming for a combination of SMRs and large reactors to raise the share of nuclear power to 100 GW by 2047. Previously, the NEM was restricted to SMRs, but the budgetary exemptions have now been extended to all nuclear power projects, regardless of capacity. It appears that the government is taking into account both small reactors for off-grid or captive use and large reactors for grid purposes.
SHANTI Act, 2025: A Turning Point in India’s Nuclear Liability Framework
Second, these exclusions are consistent with the recently enacted SHANTI Act, 2025, which superseded the Civil Liability for Nuclear Damage Act (CLNDA), 2010, and the Atomic Energy Act (AEA), 1962. Private companies are now able to operate in the nuclear industry thanks to the SHANTI Act. Additionally, it harmonized liability rules with the 1997 Convention on Supplementary Compensation for Nuclear Damage (CSC), an international nuclear liability legislation. Unlike the CLNDA regulations, which permitted the operator to hold the supplier accountable for the occurrence, liability for an accident is now limited to the nuclear power station operator alone.
India Nuclear Energy Policy: Opening the Door to Light Water Reactors and Global Supply Chains
By lowering project costs overall, the SHANTI Act’s provisions and import tax exemptions are intended to further promote private involvement in atomic power generation, both domestically and internationally. This will probably make building a nuclear power plant profitable, exportable, and financially feasible. Additionally, India can think about putting money into nuclear projects based on Light Water Reactors (LWRs), which make up the bulk of the global reactor industry but for which India lacks experience, through joint ventures or imports. Although Pressurized Heavy Water Reactors (PHWRs) are an area in which India excels, proficiency with LWRs will enhance integration into international supply chains.
India Nuclear Energy Policy: Data Centers, Cloud Services, and the Coming Surge in Clean Energy Demand
Third, to encourage investment in the data center industry, the FM declared in a separate budget announcement a tax exemption until 2047 for international cloud service providers “that provide cloud services to customers globally by using data center services from India.” India now has 1.2 GW of installed data center capacity, which is predicted to more than quadruple to almost 4 GW by 2030, according to the Economic Survey of 2025–2026.
Accordingly, in order to meet New Delhi’s net-zero carbon-emission targets, India will experience a huge demand for energy in the upcoming years, ideally, clean energy. To fulfill the needs of the data center industry, nuclear power will be able to contribute more to the nation’s renewable energy mix thanks to customs duty alleviation in the nuclear sector, mainly through the deployment of SMRs.
Draft National Electricity Policy 2026 and Nuclear Power as Green Energy
Fourth, nuclear power generation is given a lot of weight in the draft National Electricity Policy (NEP), 2026, which was released on January 20, 2026, to gather public feedback. It sees nuclear power plants taking the place of retired thermal power facilities and captive coal-based plants. It recommends that nuclear projects be eligible for green bond financing and encourages major commercial and industrial consumers to use nuclear-generated power. The SHANTI Act and the budget announcement have made it easier to build nuclear power facilities that comply with NEP’s guidelines.
Fifth, the SHANTI Act and budget statements about nuclear are probably going to have a big impact on India’s international nuclear cooperation, especially with the US. Russia and India have a long history of working together on nuclear issues. The nuclear ties between France and India are also expected to strengthen in the future. However, the liability clause in the CLNDA prevented the US from being forthcoming even after the India-US nuclear deal was finalized. It is anticipated that India-US nuclear cooperation will reach its full potential now that the SHANTI Act is in effect.
India Nuclear Energy Policy: India–US Nuclear Cooperation Gets a Fresh Momentum
Given that both nations are anticipated to sign a free trade deal to lower tariffs on one another’s goods and boost bilateral trade, the India-US nuclear collaboration takes on much more importance. The budget declaration will encourage imports of nuclear technology and materials for nuclear power plants from the United States, and the high-value nuclear trade is anticipated to benefit both nations in the days ahead.
India’s Long-Term Nuclear Vision: From SMRs to Global Leadership
The exemptions from customs duties on nuclear power plant input materials should not be seen as a stand-alone measure, but rather as an extension of earlier efforts that started with the NEM budget announcement for 2025–2026 and were followed by the SHANTI Act’s enactment. Taking into account future power demand driven by emerging technology, all of the initiatives are unidirectional and aim to acquire modern nuclear reactor technology, capture a sizable portion of the developing SMR market, integrate New Delhi into the global nuclear supply chain, establish international nuclear partnerships, and increase the share of nuclear power in India’s renewable energy mix.
According to all reports, the government is adopting a long-term view of the nuclear power industry and making little but steady progress toward achieving the target of 100 GW of nuclear power by 2047, which was set in the last budget.
This article is based on and inspired by an analysis originally published by the Institute for Defence Studies and Analyses (IDSA) titled “Union Budget and SHANTI Act 2026: Enablers for India’s Nuclear Ambitions”, dated February 06, 2026.