Category Archives: INDIA RELATIONS

Making Sense of the Political Tsunami in Nepal

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Published in The Hindu (online) on March 14, 2026

As a landlocked country, Nepal has gone through both geological and political earthquakes in recent years but the snap election held on March 5 has been nothing short of a political tsunami. The old political parties have barely scraped through and the Rashtriya Swatantra Party (RSP), which is less than five years old, has won 125 seats out of the 165 first-past-the-past FPTP seats; with 57 proportional representation (PR) seats, it has a total tally of 182, just two short of the two-thirds mark, an unprecedented outcome in a Nepali election. Most of the political leaders who have dominated the Kathmandu scene for the last quarter century will be missing when the new House is convened. However, the RSP leaders now face a bigger challenge – of converting a stable majority into institution-based policy formulation and good governance team to deliver on the high expectations generated.

Crisis after crisis

Barely had the 21st century begun when Nepal went through its first major political crisis. On June 1, 2001, at a family dinner at the Narayanhiti Palace, Crown Prince Dipendra killed nine members of the royal family, including his father, King Birendra, and his mother, Queen Aishwarya. As Nepal mourned, he died three days as a result of a self-inflicted gun wound. King Gyanendra took over, marking a turning point for the two-century old Shah dynasty.

Meanwhile, Nepal was also struggling with a Maoist insurgency that finally ended by 2006 with the political mainstreaming of the Maoists. In the Terai, the Madhesi movement had gained momentum, backing demand for a federal structure. During his seven years, King Gyanendra changed prime-ministers six times and even abolished the National Assembly to impose direct rule. However, the political parties were able to lead a Jan Aandolan that forced him to retreat.

A Constituent Assembly (CA) was elected in 2008 that voted to abolish the monarchy marking Nepal’s second major political change. The CA’s mandate was to draft a constitution for a federal democratic Nepal in two years. The process turned out to be politically difficult and took considerably longer. After another CA election mandated by the Supreme Court in 2013, a new constitution was finally adopted in 2015.   These seven years saw six prime-ministers. The reason was simple. Both the 2008 and the 2013 elections failed to throw up clear majorities, and the leaders of the political parties – Nepali Congress (NC), Communist Party of Nepal -United Marxist Leninist (UML), Maoists and the Madhesi parties – devoted their time to jockeying for positions in the coalition governments.

The 2015 constitution marked Nepal’s third political turning point but the expectations of the much-awaited dawn of a naya Nepal were soon belied. From 2015 to 2025, Nepal saw seven prime-ministers but the faces were the same – UML leader K P Sharma Oli thrice, NC leader Sher Bahadur Deuba twice, and Maoist leader Pushpa Kamal Dahal Prachanda twice.

The lavish lifestyles of the political elite went viral on social media accompanied by tales of corruption and impunity of ‘nepo-babies’. The disconnect between a young Nepal with a median age of 26 years and a self-absorbed political leadership in its 70s, was combustible. The spark came when the Oli government banned 26 social media websites (including Facebook, X, WhatsApp, LinkedIn, Signal, YouTube, and Instagram) on September 4 for failing to comply with domestic regulations. Resentment erupted as Gen Z protests on 8-9 September, leading to widespread looting and arson across Nepal. With 77 deaths due to police firings, Prime Minister Oli was forced to resign.  

Former Chief Justice Sushila Karki was sworn in on September 12 to head an interim government. According to the Constitution, an interim leader should have been from the Assembly but given the anger against all the political parties, President Ram Chandra Poudel’s choice was guided by public sentiment. Ms. Karki made it clear that her goal was to ensure inclusive and peaceful elections within six months and she has delivered on her promise by bringing Nepal back on the constitutional path.

Message of the 2026 election

The Gen Z protests brought down the Oli government. The decimation of the old political forces in the 2026 elections mark 21st century Nepal’s fourth political transformational moment. Beginning 2008, when Nepal introduced PR seats along with FPTP to ensure a more balanced political representation, none of the last four elections (in 2008, 2013, 2017 and 2022) saw any political party manage a clear majority. Most Nepali observers had blamed the PR system for political instability and unwieldy coalitions. However, RSP’s victory puts that myth to rest.

The number of MPs, under 40, has gone up to 61 out of 165 FPTP members, and 52 are from RSP. NC has slipped from 89 seats in 2022 to 18 and UML from 78 to 9. Both parties had seen calls for leadership changes after the Gen Z protests. In the UML, K P Sharma Oli managed to stave it off leading to his ignominious defeat in his home constituency that he had represented since 1991, by 35-year-old Balendra (Balen) Shah, a former mayor of Kathmandu, fighting his first assembly election. NC managed an organisational reshuffle with 51-year-old Gagan Thapa easing out 79-year-old five-time PM Sher Bahadur Deuba but it happened too late to improve NC’s prospects. All the pro-Monarchy and Madhes parties have been wiped out. Evidently, identity politics (Madhes/Pahad, Khas Arya/Janjati, secularism/Hindu rashtra) was not a factor in 2026.

The credit for RSP’s victory goes to its founder chairman Rabi Lamichhane and Mr. Shah who joined the party in December-end on the understanding that while Mr. Lamichhane would continue as the party chairman, he (Balen) would be the party candidate for PM. He, together with the party symbol ghanti, became the face of the RSP campaign. It was a politically sound decision because Mr. Lamichhane’s short stint in government following the 2022 elections, as Deputy PM was marked by controversies. The first was on account of the fact that he hadn’t renounced his U.S. citizenship, and the second is an ongoing criminal case regarding financial embezzlement from a number of cooperative societies. But such was the pro-RSP wave that out of its tally of 125, 42 MPs are those who defected from other parties less than eight weeks before the elections.

Success raises its own challenges. The RSP spelt out ambitious targets in its manifesto – ensuring 7% annual growth, doubling the per capita income to $3000 and GDP to $100 billion, creating 1.2 million formal jobs to curb the daily youth migration running at 3300, delivering universal health insurance and integrated social security, and reforming public education.

Among the promised administrative and political reforms are – reducing ministries from 25 to 18, bringing in experts as ministers so that MPs only exercise oversight, merit-based bureaucracy and judiciary, a review of assets of all public officials since 1990, and constitutional amendments for a directly elected Executive with a fully PR parliament. Mr. Lamichhane and Mr. Balen will have to show that they can work together to prioritise elements from this list and put together a core team that can deliver.

Managing external relations

On the foreign policy front, establishing ground rules for relations with India, China and the U.S. will be another challenge. As Mayor of Kathmandu, Mr. Shah has been temperamental and kept aloof from media, relying instead on his social media outreach. In a country with a population of 30 million, he enjoys a following of 3.7 million on Facebook and a million on Instagram. Even during the election campaign, he spoke at only five events, for a total of 27 minutes. He is a Madhesi by birth, speaks Maithili but did not exploit it. His messaging doesn’t rely on speeches and TV interviews but social media.

His outbursts can be mercurial; last November his Facebook, “F…America F…India F…China F…UML F…congress F…RSP F…RPP F…Maobaadi You Guys all Combined can do Nothing (Smiley)” generated criticism before he deleted it. In 2023, in response to the unveiling of the mural of Akhand Bharat in India’s new parliament building, he put up a map of Greater Nepal in his office that showed parts of Uttarakhand, Himachal Pradesh and West Bengal as part of Nepal. He declared that “India called its parliamentary map a cultural one, so we put up a historical map of Greater Nepal. No one should object”.

Prime Minister Narendra Modi has spoken to both Mr. Shah and Mr. Lamichhane to congratulate them and both sides have conveyed their intention to strengthen and deepen bilateral relations. Mr. Lamichhane has talked of Nepal pursuing the path of “development diplomacy”. Given the changes in Nepal, India will need to be careful about reiterating the old mantras of cultural, historical and religious ties and invoking tropes of Ayodhya-Janakpur, Kashi-Pashupatinath and, roti-beti ka rishta; it should now invest in developing a new idiom of responding to the naya Nepal. 

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The Turmoil in Kathmandu, the Road Ahead for Nepal

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Published in the Hindu on Sptember 27, 2025

The Gen Z protests that erupted in Kathmandu on September 8, 2025,  snowballed rapidly, taking the Nepali government by surprise. The excessive police reaction led to an explosion of public anger, and the rapidly evolving situation forced Prime Minister K. P. Sharma Oli to quit the following day, creating a vacuum that even the Gen Z protestors were unprepared for.

Following talks between the Gen Z representatives and the Chief Of Army Staff Gen A. R. Sigdel, former Chief Justice Ms Sushila Karki was sworn in as Interim Prime Minister on September 12, with the mandate to conduct fresh elections within six months. The current parliament has been dissolved, an apolitical cabinet of  experts is taking shape, and calm has returned to the streets.

Elections have been fixed for March 5, 2026 but questions persist. How will the Gen Z organise themselves around a political platform? Will the established political parties be ready? Meanwhile, suggestions are afoot for amending the constitution but this may open a Pandora’s box in the absence of process legitimacy.  

A turbulent phase in India’s neighbourhood

The decade of the 2020s has witnessed political changes in India’s neighbourhood – in February 2021, the experiment with democracy in Myanmar collapsed as the military assumed full control; later in 2021, the Taliban returned to Kabul as the U.S. withdrew from Afghanistan; in mid-2022, the Aragalayamovement in Sri Lanka forced President Gotabaya Rajapaksa to flee the country; in Pakistan in May 2023, the arrest of former Prime Minister Imran Khan led to widespread protests but the military took charge of the situation; and, in August 2024, protests in Bangladesh gathered momentum forcing PM Sheikh Hasina to quit and leave Dhaka. Hardly surprising that analysts would look for patterns that can fit their models or conspiracy theories.

However, each of these changes has its own history. Sheikh Hasina had been in power since 2009 and the recent elections had been disputed even as she cracked down on the opposition. In Sri Lanka, the Rajapaksa family had been ruling since 2004 with a short interregnum. Myanmar and Pakistan have had long spells of military rule; the military has remained in the driver’s seat – openly as in Myanmar or behind the scenes, as in Pakistan. Afghanistan followed the familiar pattern of failed interventions by the United States – since Vietnam in the 1960s, and in 2021, when it had become apparent that continued U.S. presence in Afghanistan would not help matters.  

If there are similarities, these are primarily the dominant role played by the youth in the protests and secondly, the higher levels of youth unemployment compared to the total unemployment in these societies. While overall unemployment levels in Bangladesh, Nepal and Sri Lanka are between 4-5%, youth unemployment is above 16% and in Nepal, above 20%. Politically, Sri Lanka and Bangladesh have had political stability given long tenures of the Rajapaksa brothers and Sheikh Hasina respectively but this led to nepotism, corruption and increasing disdain for democratic accountability.

Nepal’s political transition

In contrast, Nepal’s political trajectory has been different with frequent government changes. Since 2015, when the constitution was adopted, there were seven governments but with the same leaders playing musical chairs, UML leader Oli thrice and both Maoist leader Prachanda and NC leader Sher Bahadur Deuba, each twice. It created a curious internal stability where cronyism, nepotism and corruption flourished, within the outward instability that prevented job growth and economic development.

Nepal’s political transition began 35 years ago. The 1990 Jan Aandolan replaced Panchayati Raj with multi-party democracy and circumscribed the monarchy to a constitutional role. However, intra-party rivalries provided fertile grounds for the monarchy to play favourites. A Maoist insurgency surfaced in 1996 and over a decade, gradually engulfed large parts of the country claiming 17000 lives.

It took 17 years before the political parties came together to work out a peace process that permitted the Maoists to come overground and emerge as a political party. During this period, there were 15 changes of government and one spell of direct rule by King Gyanendra that sparked the second Jan Aandolan in 2006, forcing him to restore parliament and the elected government.

In 2008, an elected Constituent Assembly declared Nepal to be a republic ending the 240-year-old monarchy and began drafting a constitution for a federal republic. Instead of the given two-year deadline, the constitution was promulgated after seven years in 2015. More time was spent on government formations and these seven years witnessed six PMs. Maoist leaders served twice, UML leaders twice, NC once and an interim government was created under Chief Justice Khil Raj Regmi for electing a second constituent assembly in 2013. 

The 1990 and 2006 Jan Aandolans were spearheaded by the political parties to wrest political power from the monarchy but the 2025 Gen Z protests reflect a broader frustration with political leaders of all political parties, for misusing coalition politics for amassing personal wealth.

President Ram Chandra Poudel has reiterated that he will observe the constitution and has sought to justify concerns about the appointment of an Interim PM by citing Article 61. Art 61 merely directs the President to “promote the national unity” and “to abide by and protect the Constitution”. Since a state of national emergency was not declared, Gen Sigdel played a political role in identifying and holding consultations with the Gen Z representatives. The army also moved the targeted leaders and Ministers into military cantonments for their security. Clearly, Mr. Poudel depended on the army because it is the only institution that enjoys social respect.

Ms. Karki has identified three priorities for the Interim Government – to ensure elections on March 5; to fix accountability for the use of excessive force by the police and the arson and vandalism; and to expose and prosecute corruption in high political office. The last two will be difficult as there are reports of politically affiliated gangs infiltrating the Gen Z protests, and fast track prosecutions in Nepali justice system are unheard of.

There is a growing sentiment that the 2015 constitution that introduced a 275 member House of Representatives with First Past The Post (165 seats) and Proportional Representation (110 seats) somehow prevents the emergence of a majority government. Other ideas doing the rounds are to introduce a directly elected executive, and do away with federalism by empowering local bodies. Pushing such ideas through a constitutional commission and national referendums could create more difficulties. Any dilution of federalism or Proportional Representation system is bound to spark protests among the Madhesis, Janjati and Tharu communities.

Such moves into uncharted political territory and questionable legitimacy run contrary to Mr. Paudel’s assurance of abiding by the constitution and may jeopardise the election schedule. The established political parties need time for internal leadership churn that the old timers will resist. New political forces led by youth leaders will emerge and it is likely that some pro-monarchy elements may also sense an opportunity to recover lost ground.

Focus should be on fair elections

Fortunately, India has escaped criticism in Nepali media in connection with the current political turmoil. The restrained official statements and the phone call by Prime Minister Narendra Modi on September 18, to congratulate Ms. Karki, convey condolences at the loss of life, and assure full support to Nepal, keeps communication channels open.  

Peaceful, free and fair elections on March 5 would be best way forward for Nepal; any other ambitious moves by vested interests would only increase uncertainties generating an atmosphere of mistrust and insecurity in which the political gains of the last two decades towards a more democratic and inclusive Nepal would be at risk.

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Political Meltdown in Nepal was a Long Time Coming

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Published in the Hindustan Times on September 11, 2025

 

Tens of thousands of demonstrators, describing themselves as Gen Z, converged near the parliament in Kathmandu on Sept 8, to protest against a ban on 26 social media platforms (including Facebook, WhatsApp, X, Instagram, Reddit, LinkedIn, Signal and YouTube) announced last week for failing to register under the new government guidelines. Even as the police resorted to batons, water cannons, and rubber bullets to disperse the protestors, the crowds continued to grow and by the end of the day, 20 young people (including a 12 year old) were dead, with reports of 400 injured.

The following day, anger had spread to other cities and government buildings including the parliament and Singha Dubar were set on fire. Private houses of leading politicians cutting across party lines, were torched, cars burnt and ministers manhandled. Home Minister Ramesh Lekhak had accepted responsibility and resigned on Sept 8 and the ban order was also reversed but the protestors were not satisfied. Finally, Prime Minister K P Sharma Oli realised that he needed to go and he resigned on Sept 9 in the afternoon. There are rumours that he was evacuated in a helicopter by the army to a secure location as his official residence at Baluwatar was considered vulnerable.   

Nepal’s political transition has been a long time in the making and has gone through multiple transitions. It began with the popular uprising in 1990, labelled as Jan Aandolan 1, leading to a new constitution that laid the foundations of multiparty democracy by curbing the role of an absolute monarchy into a constitutionally circumscribed role. However, in mid-1990s, a Maoist insurgency began to take shape in some of the poorer hill areas that gradually took hold and spread. Infighting between the political parties and the Palace provided a permissive environment for the insurgency to spread and by 2006, it had claimed 17000 lives.

In 2005, King Gyanendra declared a state of emergency, dissolved parliament, dismissed the elected government, and assumed direct rule. A popular pushback led to Jan Aandolan 2 in 2006 that forced him to restore parliament. A peace process between the political parties and the Maoists, facilitated by India, led to the Maoists coming overground and emerging as a political party. Elections for a Constituent Assembly (CA) took place in 2008. The 240-year-old monarchy was abolished, Nepal emerged as a republic, and the CA began work on a new constitution for a Naya (new) Nepal.

After seven years, Nepal adopted its new constitution but the promise of a New Nepal remains a distant dream. A key reason has been weak economic development, lack of employment opportunities, growing corruption, and frequent changes of government. In the 17 years since it became a republic, Nepal has had 15 governments. The situation didn’t improve even after 2015 when the new constitution was adopted, with the last decade accounting for nine of the 17 governments.

Part of the reason is that in none of the elections since 2008 did any party manage to obtain a clear majority necessitating coalitions. This explains the political instability of short-lived coalitions. However, there has been a strange stability too, in that the leaders of the three major parties, Nepali Congress (NC), United Marxist Leninist (UML), and Maoist Centre, have been taking turns in leading the incestuous coalitions and garner the loaves and fishes of office. In the process, corruption grew visibly and the groundswell of public disenchantment was just waiting for a spark that was provided by the ill-conceived ban on the 26 social media platforms, leading to Jan Aandolan 3.   

However, there are differences. The earlier two Jan Aandolans were spearheaded by the political parties, primarily the NC and the UML and had the clear objective of wresting political power from the Monarchy and had an identifiable leadership. The Jan Aandolan 3 rejects the leaders of all political parties and there have been calls for dissolution of the parliament and even revising the constitution.

Second, there is no visible leadership. The 35-year-old Balen Shah, a rapper turned electoral phenomenon, the surprise winner to be elected Mayor of Kathmandu in 2022, is trying to emerge as a leader in Jan Aandolan 3. On September 7, he conveyed support to the protestors and after keeping quiet for a day, came out after PM Oli’s resignation urging restraint.

Another name doing the rounds is the 38-year-old Sudan Gurung, who founded the NGO Hami Nepal (Our Nepal) in 2015 following the devastating earthquake to ensure that humanitarian assistance was delivered efficiently where it was most needed by mobilising youth volunteers. During the past decade, his NGO has been successful in mobilising resources for communities impacted by floods and landslides that take place with depressing regularity. Hami Nepal was heard as a slogan during the protests.

Other than conveying sorrow at the loss of innocent lives, wishing a speedy recovery to the injured, India has expressed hope that “all concerned will exercise restraint and address any issues through peaceful means and dialogue.” To ensure security and with an eye to the forthcoming Bihar elections, the border has been sealed. For the present, this is adequate even as the government remains vigilant and monitors developments to see the political actors that emerge out of the political churn of Jan Aandolan 3.

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India US Ties: Up Close, and Personal

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Published in Hindustan Times on August 13, 2025

Six months ago, at the White House, President Donald Trump and Prime Minister (PM) Narendra Modi were describing each other as ‘great’ and ‘dear’ friends, recalling the reverberating echoes of Howdy Modi in Houston (2019) and Namaste Trump in Ahmedabad (2020), and outlined an ambitious vision of India-US relations in an over 3000 word long Joint Statement.

Even as Canada rubbished Trump’s call for it to become the 51st state, NATO, Japan, and South Korea wondered about the credibility of the US nuclear umbrella, and Europeans did their best to reassure a beleaguered Volodymyr Zelensky in Kyiv, the February visit reassured India that the Modi-Trump relationship was intact and India-US ties were on a positive trajectory. Opinion polls across the world noted that Indians were the most optimistic about Trump’s second term.

Bilateral trade talks began soon after. Five rounds have taken place but trade deals take long, years at times. But Trump’s qualities do not include patience and subtlety. To push the Indians, he added a 25% tariff with a deadline of July 31.

Also, his second term was promising to be very different from his first. In his inaugural speech, he had talked of ending wars, of leaving behind a legacy as a ‘unifier and peacemaker.’ It soon became clear that in addition to deploying his favourite policy tool – tariffs, to get his trade deals, his goal was the Nobel Peace prize, preferably in the first year itself.

His tactics seemed to be working. The US has announced new trade deals with the EU, UK, Japan, and South Korea, covering more than 25% of US foreign trade, though details haven’t been worked out. In addition, negotiations are underway with over a dozen countries. China is playing hardball, and using its leverage to restrict exports of rare earth magnets. Canada and Mexico have their own leverages. China’s tactics may be working as the US has already relaxed its export controls on H20 chips to China.

On his peace-President agenda, progress has been slower. The two big conflicts that Trump had promised to sort out quickly, Ukraine and Gaza, have proved difficult. Both Russian President Vladimir Putin and Israeli PM Benjamin Netanyahu have their own ideas about their objectives and have been stringing Trump along. However, Trump has been nominated for the peace Nobel jointly by the presidents of Azerbaijan and Armenia and by Prime Minister Hun Manet of Cambodia for brokering the ceasefire between Thailand and Cambodia. The White House has also highlighted his role in ending the conflicts between Rwanda and the Democratic Republic of Congo, Serbia and Kosovo, and Egypt and Ethiopia. And somewhat cheekily, for the ceasefire between Israel and Iran especially after Trump came to Israel’s help by firing Tomahawk missiles and deploying B2 bombers to deliver the GBU 57 bombs on Iranian targets.

Netanyahu has mollified Trump by nominating him for his role in the 2020 Abraham Accords that enabled Israel to normalise relations with the UAE, Bahrain, Morocco, and Sudan. Putin is now scheduled to have a bilateral meeting with Trump in Alaska on August 15 but Ukraine and the Europeans are not invited. Meanwhile, secondary sanctions on Russia’s oil exports have been introduced and India (collateral damage) will attract a 25% penalty, effective August 27.

However, India-Pakistan crisis is perhaps where Trump feels let down by his ‘great friend Modi.’ India was upset at Trump pre-empting the ceasefire announcement on 10 May and claiming credit as a “US brokered ceasefire.” Since then, he has repeated the claim more than 25 times adding how he prevented a nuclear war, and he employed the threat of cutting trade if they continued. Each time, it was denied by Indian foreign office and military officials, and most recently by the external affairs minister S. Jaishankar and defence minister Rajnath Singh, in parliament.

Meanwhile, Pakistan was quick to thank Trump for his positive role and expressed the hope that he could continue to remain engaged and mediate on Kashmir, while nominating him for the Nobel Peace prize. Encouraged by Pakistan, Trump invited Modi to the White House on June 18 on his way back from the G-7 meeting in Canada but was turned down. Trump was presumably trying to set up a meeting with Pakistan army chief Field Marshal Munir who was invited to lunch that day at the White House. With so much happening, its easy to lose sight of the big picture.

Relations between States are governed by national interests and patient negotiations. Good ties between leaders can help but cannot be the principal driver. That’s why neither Modi nor Trump is going to pick up the phone to resolve their misunderstanding.

The end of the Cold War provided the impetus for the shift in India-US relations when President George H W Bush (41) and PM PV Narsimha Rao took the initiative in 1992 to initiate a dialogue on nuclear issues and the first baby steps for defence cooperation were taken. Gradually, despite ups and downs, and changes in governments in both countries, the positive trajectory continued and a bipartisan consensus based on mutual trust and converging interests evolved. If the nuclear tests in 1998 marked a low point, the Strobe Talbott-Jaswant Singh dialogue, and the positive US intervention in 1999 during the Kargil conflict restored trust. The story was repeated after the parliament attack in 2001 and during Balakot when US facilitated the quick release of Wg Cdr Abhinandan from Pakistani custody.

There is a difference between back-channel diplomacy and public diplomacy. While Trump has a fondness for TruthSocial, India’s geography dictates prudence. US is larger than Trump just as India is larger than Modi, and there is life after Trump and there is life after Modi. This becomes clearer if interests are given primacy as foreign policy drivers. It also helps avoid the trap of believing one’s own propaganda. The simple question is – is it in national interest to sustain relations with the US. The answer should be obvious.

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Redeeming India’s Nuclear Power Promise

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Published in the Hindu on July 23, 2025

If India is to meet its ambitious target of 100GW of power generating capacity by 2047, it needs foreign partners as well as private entities to participate in the nuclear sector which has been till now completely under the government

The Union Budget for 2025-26 marked a significant shift in India’s nuclear energy plan by announcing an ambitious target of 100 GW of power generating capacity by 2047, up from the present 8.18 GW. This positions nuclear power as a major pillar in India’s energy mix, given the two goals of emerging as a developed country (Viksit Bharat) by 2047 and achieving “net zero emissions” by 2070.

Simultaneously, the Nuclear Energy Mission announced a special allocation of Rs. 20000 crores to develop “at least five indigenously designed and operational Small Modular Reactors (SMR) by 2033.” Such ambitious plans will need involvement of private players, both domestic and foreign, into a hitherto government sector, requiring significant changes in the legislative, financial and regulatory framework. Government has indicated that some changes in the Atomic Energy Act, 1962 and the Civil Liability for Nuclear Damage Act (CLNDA), 2010 are in the offing. However, the comprehensive reforms needed also require a change in mind set.

India’s nuclear journey

India had an early start, setting up Asia’s first nuclear research reactor, Apsara, in 1956, and beginning work on Asia’s first nuclear power reactors at Tarapore in 1963. As early as 1954, Dr Homi Bhabha, the architect of India’s nuclear programme presented a target of generating 8 GW of nuclear power by 1980!

However, the journey has been long and difficult. Following the war with China in 1962; its entry into the nuclear club in 1964; India’s decision to stay out of the Nuclear Non-proliferation Treaty (NPT) in 1968; and the Peaceful Nuclear Explosion (PNE) test in 1974; India was excluded from the emerging nuclear order. International cooperation ceased and gradually, export controls further slowed down the nuclear power programme. The first unit at Rajasthan was barely set up while the second was under construction: it only went critical in 1981. The nuclear power target was pushed to 10 GW by 2000.

Moreover, India took time to successfully indigenise the design of the 220 MW Pressurised Heavy Water Reactor (PHWR), employed in Rajasthan. The advantage was that it uses natural uranium as fuel unlike the design of the Tarapur Light Water Reactor (LWR), a design that used Low Enriched Uranium (LEU) that India obtained from the U.S., and later, from France. Subsequently, the same 220 MW PHWR units were established at Narora, Kaiga, Kakrapar etc; the design was upgraded to 540 MW (set up at Tarapur TAPS 3 and 4 in 2005-06) and to 700 MW with two units getting operational at Kakrapar in 2024. Since the nuclear establishment was excluded from civilian exchanges, an understandable and unintended consequence of the 1974 PNE was that the it became inward looking and wary about external engagement.

After the nuclear tests in 1998, followed by intense negotiations with the U.S. and other strategic partners, India finally gained acceptance as a responsible nuclear power. It also got a special waiver from the Nuclear Suppliers Group (NSG). India was thus ready to resume exchanges with other nuclear powers to import both nuclear fuel and more advanced reactors to expand its nuclear energy programme.

However, the CLNDA created new difficulties that have prevented the anticipated external participation, from France and the U.S. In fact, Russia is the only country that is partnering with us at Kudankulum with six VVER-1000 power reactors because this government-to-government agreement, signed in 1988, predated the CLNDA.   

Towards green development

To become a developed country by 2047, India’s annual per capita income needs to grow from the current $2800 to $22000, and correspondingly, the GDP from the current $4 trillion to over $35 trillion. There is a well-established correlation between economic growth and energy consumption. In 2022, India’s per capita electricity consumption stood at 1,208 kWh, compared to 4,600 kWh for China, and over 12,500 kWh for the U.S.

India’s electricity generation capacity, currently at 480 GW (divided almost equally between fossil fuels and renewables), will have to grow five-fold, accounting for growth in population and urbanisation. However, solar, wind, and small hydro provide intermittent power. That is why out of 2030 TWh, the total electricity generated in 2024, renewables, with half the generation capacity, accounted for 240 TWh. Coal fired thermal plants accounted for 75 percent of the generation, the balance added by nuclear and large hydro projects.

The climate change commitments announced by Prime Minister Narendra Modi in 2021 at the Glasgow COP26, of “net zero emissions by 2070, raising non-fossil energy generation capacity to 500 GW by 2030 while meeting 50 percent of the energy demand through renewables, and achieving a carbon intensity reduction of 45 percent over 2005 levels by 2030” means that that India will not be able to rely on fossil fuels for its growth. The potential from renewables (including solar, hydro, wind, and biomass) is estimated at providing 20% of the demand and up to 25% with investments in battery and pumped storage.   The obvious candidate therefore to fuel India’s growth is nuclear power.

There is a renewed interest globally in nuclear power. It was reflected in the Dubai 2023 COP28 ‘Declaration to Triple Nuclear Energy’, acknowledging nuclear power as ‘a critical input in reducing reliance on fossil fuels, enhancing energy security, and move towards a low carbon future’. in June, the IAEA and the World Bank agreed to work together to support nuclear energy in developing countries, marking a significant policy shift. World Bank President Ajay Banga pointed out, “nuclear (energy) delivers base load power, which is essential to building modern economies.” It is quite likely that the World Bank lead will be followed by other development funding banks and organisations.

Creating an enabling environment

Government is looking at three routes ahead. One is to standardise the 220 MW PHWR design and apply it to the Bharat Small Modular Reactors, that significantly reduces costs and commissioning time. This would be relevant to replacing captive thermal power plants that today account for over 100 GW and will be replaced over the next two decades.

The second track is scaling up the Nuclear Power Corporation of India  Ltd (NPCIL) plans for the 700 MW PHWR into fleet mode by facilitating land acquisition, streamlining licensing, and strengthening indigenous supply chains.

The third track is to accelerate negotiations with partners in France and the U.S. partners that have been moving at a glacial pace for the last 15 years.

Under the Atomic Energy Act, nuclear power is a sector reserved by the government. The NPCIL is a government owned company that builds, owns, and operates the PHWRs, the first two Tarapur LWRs, and the Russian designed VVERs.

Nuclear power financing is qualitatively different because of the higher upfront capital costs, lower operating costs, a lifecycle of 50-60 years, and costs associated with decommissioning and radioactive waste management. The indigenised PHWR model has a capital cost of $2 million/MW while the equivalent cost for a coal fired thermal unit is just under a million. Given NPCIL’s annual budget of $1.2 billion, government realises that to achieve the target of 100 GW, private sector companies will have to be brought into the sector, necessitating a comprehensive set of amendments to the Atomic Energy Act.

Questions of majority/minority ownership, whether the nuclear operator is exclusively NPCIL; responsibility and control over the nuclear island part of the plant; and concerns over assured fuel supply and waste management responsibility will need to be considered with the potential stakeholders that include major players like Tatas, Adani, Ambani, Vedanta and L & T. The power plants will be under IAEA safeguards and ensuring this is a sovereign responsibility, necessitating a different legal framework. All these will require amendments to the 1962 Act.

A set of comprehensive amendments will also be needed for the 2010 CLNDA. The Liability Law was intended to be consistent with the international Convention on Supplementary Compensation (CSC) for Nuclear Damage to which India is a party. The CSC provides liability to be channelled only to the ‘operator;’ however the CLNDA added a ‘right of recourse’ by the ‘operator’ to the ‘supplier’ as well as the possibility of legal proceedings under other applicable laws. The government has tried to square the circle by providing explanations that but appears to have finally accepted the need for legal clarity through amendments.

A third area is commercial disputes relating to tariffs. Nuclear electricity tariff for NPCIL is notified under the Atomic Energy Act. Generally, commercial disputes fall under the Electricity Act and are settled by the Central Electricity Regulatory Commission (CERC) but a recent dispute between NPCIL and Gujarat Urja Vikas Nigam has led to conflicting views by the CERC and the Appellate Tribunal. The case is now under consideration before the Supreme Court. With the entry of private sector in the field, should the tariff setting come into the ‘levelized cost of energy’ as applicable to thermal, solar, wind and hydro will depend on how the question of ownership and control are determined.  

While India has had an impeccable nuclear safety record, the certification and safety oversight is the responsibility of the Atomic Energy Regulatory Board (AERB) that is ‘autonomous’ but not a legal entity and is subordinate to the Department of Atomic Energy. In 2011, a draft Bill was circulated to establish AERB as an independent regulator, but the Bill lapsed. With the entry of the private sector, the need for an independent regulator becomes paramount.

In addition, a raft of financial incentives will need to be introduced. While nuclear energy is a low-carbon energy source, it is not classified as “renewable,” like solar or wind. Revising this classification would make nuclear power projects eligible for tax incentives and specially designed ‘green financing’ instruments. Long term power-purchase-agreements and provision for viability-gap-funding are other incentives. The sector also needs to be opened for FDI participation, perhaps up to 49 percent, to ensure Indian ownership and control.  

In the past, the process of reform has been tentative. In 2011, NPCIL set up a Joint Venture (JV) with the National Thermal Power Corporation (NTPC) but it languished till it was revived last year. It will now build and operate 4 units of 700 MW each, scheduled to come up at Mahi Banswara in Rajasthan. Land acquisition has been underway and once completed, the first unit will take seven years. A JV with Rural Electrification Corporation (REC) is also envisaged. Both REC and NTPC are PSUs and these JVs will be wholly government entities.

However, if India has to deliver on the promise of 100 GW by 2047, India needs foreign partners and the private sector. This has been accepted by the government Now it has to move forward the reform process comprehensively and decisively.  

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