AI Revolution and Data Centres: India’s SMR Leap to Power the Future

 AI Revolution and Data Centres: India’s SMR Leap to Power the Future

As the global race for Artificial Intelligence (AI) supremacy intensifies, the frontline has shifted from silicon chips to the power grid. AI data centres, the gargantuan "digital brains" of the 21st century, are projected to consume nearly double the electricity by 2027. In India, where data storage capacity is expected to hit 1.8 GW next year, the traditional grid—already strained—is hitting a wall. Solar and wind, while green, lack the 24/7 "baseload" reliability that sensitive GPU clusters demand.

Enter the Small Modular Reactor (SMR).

No longer a futuristic concept, SMRs are the cornerstone of the government’s newly minted SHANTI Act 2025. By dismantling the decades-old state monopoly and resolving the supplier liability deadlock, India is betting on these factory-built, 300 MW nuclear modules to fuel its digital dream.

Why SMRs? Why Now?

Unlike the massive 1,000 MW reactors of the past that took decades to build, SMRs are designed for speed. Their modular nature allows components to be factory-fabricated and "plugged in" near demand centres. For a data centre in Mumbai or Chennai, having a dedicated "captive" SMR on-site means total energy independence from the grid and a zero-carbon footprint—a critical metric for global tech giants like Microsoft and Google, who have pledged carbon-negative goals.

What are Small Modular Reactors (SMRs)?

SMRs are advanced nuclear fission reactors with a power capacity typically up to 300 MWe (megawatts electric) per unit—roughly one-third the capacity of traditional large-scale reactors.

• Small: They have a physically smaller footprint, allowing them to be located in places where traditional plants cannot go (e.g., near industrial clusters or data centres).
• Modular: Their components are factory-fabricated, transported as a unit, and assembled on-site. This contrasts with traditional plants which are custom-built "stick-build" projects.
• Reactor: Like traditional plants, they use nuclear fission to generate heat; however, they often utilize advanced cooling (molten salt, gas, or liquid metal) alongside standard water-based designs.

Advantages and Disadvantages

Advantages	Disadvantages
Lower Upfront Cost: Smaller scale means lower initial capital investment.	Higher Cost per kWh: Currently, SMR electricity is more expensive than large-scale nuclear or solar due to lack of scale.
Passive Safety: Many use "walk-away" safety (gravity or natural convection) that doesn't require human intervention.	Waste Management: They still produce radioactive waste, and some designs may produce more waste per unit of energy.
Siting Flexibility: Can be built on brownfield sites (retired coal plants) or near cities.	Regulatory Hurdles: Existing laws are designed for large plants; SMRs require new, faster licensing frameworks.
Scalability: Modules can be added incrementally as power demand grows.	Public Perception: General nuclear "NIMBY" (Not In My Backyard) sentiment remains a barrier.

 

Issues in Setting Up SMRs in India

The Civil Liability Bottleneck (CLND Act 2010)

The Civil Liability for Nuclear Damage (CLND) Act, specifically Section 17(b), is a global anomaly. While international conventions place liability solely on the operator, Indian law allows the operator to sue the supplier if an accident is caused by faulty equipment.

• Impact: Global giants like GE, Westinghouse, and EDF are hesitant to enter the Indian market. For SMRs, which rely on a wide "assembly line" of diverse component suppliers, this legal risk multiplies, as every small valve maker faces existential legal threats.

The State Monopoly

The Atomic Energy Act of 1962 restricts the "ownership, control, and operation" of nuclear power plants to the Central Government and its Public Sector Undertakings (PSUs) like NPCIL. As per the new policy, Government is planning to allow Private companies to set up such plants.

• Impact: This prevents private tech titans (e.g., Tata, Reliance, or Adani) from building and owning SMRs for their own data centres. Without private capital and competition, the sector remains dependent on limited government budgets. Now that the sector is being opened up for Private Sector, this hurdle should be out of the way.

Capital Intensity and Financing

Even though an individual SMR is cheaper than a giant 1GW plant, the specific cost per megawatt is often higher initially.

• Impact: A fleet of 10 SMRs requires an outlay exceeding ₹20,000 crore. In a high-interest environment like India, the "cost of capital" makes nuclear electricity expensive. Unlike solar, which sees returns in 5 years, nuclear takes decades, making it unattractive for commercial banks without massive government guarantees.

Supply Chain and "Nuclear Grade" Manufacturing

Nuclear components require "N-Stamp" certification, involving extreme precision and specialized materials that can withstand high radiation and pressure for 60 years.

• Impact: India has very few heavy forgings facilities capable of making reactor pressure vessels. Transitioning from "standard industrial" to "nuclear grade" manufacturing requires massive investment in quality control which many Indian SMEs cannot currently afford.

Regulation (AERB)

The Atomic Energy Regulatory Board (AERB) is designed to oversee a few massive projects.

• Impact: SMRs imply a shift toward hundreds of smaller units scattered across the country. The AERB currently lacks the technical manpower and digitized "type-certification" processes to evaluate dozens of different SMR designs simultaneously without causing decade-long approval backlogs.

The "Indigenous vs. Foreign" Tech Dilemma

India is torn between repurposing its proven 220MW Pressurized Heavy Water Reactor (PHWR) design as an SMR or importing Light Water Reactor (LWR) technology from the West or Russia.

• Impact: Choosing the PHWR allows for domestic fuel (Natural Uranium) but lacks the advanced "passive safety" features of modern SMRs. Importing foreign tech brings higher efficiency but increases "technological dependency" and costs.

Fuel Security and the NSG Barrier

India is not a member of the Nuclear Suppliers Group (NSG).

• Impact: While the 2008 waiver allows for some trade, India still faces hurdles in securing long-term, high-volume "Enriched Uranium" required for many modern SMR designs. Without a domestic enrichment capacity scaled for SMRs, India remains vulnerable to global geopolitical shifts in the fuel market.

Land Acquisition and Local Resistance

Even though SMRs require significantly less land (roughly 10% of a large plant), the word "Nuclear" triggers immediate local anxiety.

• Impact: India’s land acquisition laws are stringent. Protests (similar to those seen in Kudankulam or Jaitapur) can stall projects for years. SMRs intended for "brownfield" sites (near old coal plants) still face hurdles regarding local rehabilitation and safety-zone zoning.

Data Centre Integration and Safety Perimeters

AI Data Centres require high security, but Nuclear Power Plants require "Exclusion Zones" (typically a 1.5km radius).

• Impact: Integrating an SMR directly onto a Data Centre campus creates a regulatory issues. Reconciling the Cybersecurity protocols of a data centre with the Physical Security protocols of a nuclear site is a dual-layered challenge that Indian regulators have yet to define.

The Missing "Deep Geological Repository"

India currently uses "near-surface" facilities for low-level waste and "interim storage" for high-level waste.

• Impact: As SMRs proliferate, the volume of spent fuel increases. Without a finalized, scientifically proven Deep Geological Repository (DGR) for long-term storage, public and environmental opposition will likely intensify, citing the "unsolved waste" problem.

Grid Infrastructure and "Smart" Distribution

India’s National Grid is built on "Hub and Spoke" models—large plants sending power over long distances.

• Impact: SMRs are decentralized. Integrating them requires a "Smart Grid" capable of handling "distributed generation." Current DISCOM (Distribution Company) infrastructure in many states is too antiquated to manage the fluctuating loads and peer-to-peer power sharing that SMR-heavy grids require.

Legacy of Delays (The "PFBR" Syndrome)

The Prototype Fast Breeder Reactor (PFBR) at Kalpakkam is a cautionary tale, delayed by nearly two decades.

• Impact: Such delays have eroded the confidence of private investors and international partners. The perception is that Indian nuclear projects inevitably suffer from "cost and time overruns," making it difficult to attract the "Fast Capital" needed for the AI revolution. But the leading business Groups have shown interest in setting up new projects under the proposed guidelines for private Sector.

Specialized Skill Shortage

Nuclear engineering is a highly niche field in India, dominated by government research (BARC).

• Impact: There is a massive "brain drain" of nuclear scientists to the West. To run a fleet of SMRs, India needs thousands of private-sector nuclear technicians, safety officers, and decommissioning experts—a workforce that currently does not exist at the required scale.

Economic Competition with Renewables

In India, the levelized cost of Solar/Wind has dropped to roughly ₹2.5–3 per unit. SMR power is currently estimated to be significantly higher (₹7–10 per unit).

• Impact: State-run DISCOMs, which are already in deep debt, are reluctant to sign Power Purchase Agreements (PPAs) for expensive nuclear power when cheaper (though intermittent) green energy is available, even if nuclear provides better "baseload" stability.

Geopolitical Friction and Sanctions Risk

Nuclear technology is "dual-use" (civil and military).

• Impact: India’s neighbours often use international platforms (like the IAEA or UN) to raise "proliferation" concerns regarding India’s nuclear expansion. Any future geopolitical tension could trigger "secondary sanctions" on tech components, potentially paralyzing a fleet of SMRs that rely on global supply chains.

Action Plans for India’s SMR Revolution

Amend the Atomic Energy Act (The SHANTI Bill 2025)

The government is replacing the restrictive 1962 Act with the SHANTI Bill.

• This reform shifts the sector from a state-run monopoly to a competitive market. For the first time, Indian-registered private firms can build, own, operate, and even decommission nuclear plants. It allows for "Minority Foreign Stakeholding," enabling tech giants like Microsoft or Adani to form Joint Ventures with global reactor designers to power their captive AI clusters.

Clarify and Cap Liability (The 2025 Liability Shift)

To resolve the "Supplier Liability" deadlock, the government is moving toward a pragmatic, global-standard regime.

• The new framework removes the "automatic" right of recourse against suppliers. It caps the operator’s liability at ₹3,000 crore (300 million SDRs), with the government acting as a backstop for damages beyond that. A specialized Nuclear Liability Fund and an Insurance Pool are being funded by a small levy on every unit of nuclear electricity sold.

SMR-Specific "One-Window" Licensing

Traditional licensing for a 1,000 MW plant takes 5–7 years; SMRs need a process that takes less than 24 months.

• The AERB is shifting to "Type Certification." Instead of reviewing every single site-specific reactor, they will certify a "Standard Design" (like the Bharat Small Reactor). Once a design is approved, any private player can "plug and play" it at a pre-cleared site, significantly slashing the pre-construction timeline.

Coal-to-Nuclear (C2N) Transition Strategy

India has hundreds of gigawatts of retiring coal-fired capacity.

• The C2N Strategy focuses on repurposing these "brownfield" sites. By replacing a 250 MW coal unit with a 220 MW SMR, India saves billions on land acquisition and grid infrastructure. These sites already have cooling water access, rail connectivity, and high-voltage transmission lines, making them the fastest path to 100 GW.

Granting "Infrastructure Status" & Green Bonds

Nuclear has historically been excluded from "Green" finance due to waste concerns.

• By granting SMRs Harmonized Infrastructure Status, the government allows developers to access 25-year low-interest loans. Furthermore, SMRs are being included in India’s Sovereign Green Bond Framework, attracting ESG-focused global capital that previously only went to solar and wind projects.

Production Linked Incentive (PLI) for Nuclear

To stop importing expensive components, India is launching a ₹15,000 crore PLI scheme for the nuclear supply chain.

• This incentivizes Indian manufacturers (like L&T, Godrej, and BHEL) to produce "Nuclear-Grade" pressure vessels, steam generators, and specialized valves. The goal is to make India a global export hub for SMR components, much like it has done with mobile phones and pharmaceuticals.

Captive Nuclear Policy for AI & Data Centres

Data centres need 99.99% uptime, which solar cannot provide without massive battery costs.

• A new "Captive SMR Policy" allows Data Centre Parks to be co-located with SMRs. These reactors will be granted "Captive Status," exempting them from cross-subsidy surcharges and allowing them to sell excess power back to the grid during low-data-load hours.

Standardizing the "Bharat Small Reactor" (BSR)

India is standardizing on the BSR-220 and the BSMR-200 (Light Water Reactor).

• The BSR is a refined version of our 220 MW PHWR technology. By freezing the design, NPCIL and private partners can order components in bulk (Fleet Mode). This "factory-line" approach reduces costs through "Learning by Doing," where the 10th reactor is 30% cheaper than the 1st.

International Strategic Joint Ventures

India is inviting global leaders like Holtec (USA), Rosatom (Russia), and EDF (France) for technology transfer.

• Under the "Make in India" mandate, foreign OEMs must manufacture at least 60% of the SMR components within India. This ensures that while the technology may be foreign, the jobs and industrial capacity remain domestic.

Accelerating Thorium-SMR R&D

India holds 25% of the world's thorium.

• The government has allocated ₹20,000 crore for the Nuclear Energy Mission, part of which is dedicated to the Advanced Heavy Water Reactor (AHWR). The goal is to create a "Thorium-SMR" that can be deployed by 2035, finally breaking India's dependence on imported Uranium.

National Skilling Mission: "Nuclear-Tech"

To manage a fleet of 500+ SMRs, India needs a massive workforce.

• The government is establishing Nuclear Energy Universities and specialized M.Tech programs in IITs. A "Private Nuclear Operator" certification is being introduced to allow non-government engineers to qualify for reactor operations and safety management.

Public Perception: The "Safe-Neighbour" Campaign

Addressing "NIMBY" (Not In My Backyard) is crucial for urban SMR siting.

• A nationwide campaign is highlighting the "Passive Safety" of SMRs—reactors that shut down naturally without electricity or pumps in an emergency. Live "Safety Dashboards" for existing plants are being made public to build trust through radical transparency.

HALEU & Fuel Security Alliances

Modern SMRs often require High-Assay Low-Enriched Uranium (HALEU).

• India is negotiating long-term fuel-swap agreements with the US and Russia. Simultaneously, BARC is scaling up domestic enrichment facilities to ensure that a "fuel blockade" cannot paralyze the AI-driven economy in the future.

Creating a "Strategic Site Bank"

Finding land is the #1 cause of project delays in India.

• The Department of Atomic Energy (DAE) is pre-identifying 50–100 sites (mostly coastal and near industrial clusters) and obtaining "In-Principle Environment Clearance." These sites will be held in a "Bank," ready to be auctioned to private developers who can start construction on Day 1.

Direct Funding for "First-of-a-Kind" (FOAK) Units

The first few SMRs are always the most expensive.

• The government is providing Viability Gap Funding (VGF) to cover the "innovation premium" of the first five indigenous SMRs. Once the technology is proven and "de-risked," the market will take over, and subsequent units will be funded entirely by private equity and commercial debt.

 

Timeline Map (2025–2047)

To scale India’s nuclear capacity from the current ~8 GW to the 100 GW target the following Schedule may be considered.

Phase 1: Foundation & Deregulation (2025 – 2027)

Focus: Removing legal barriers and inviting private capital.

• 2025 (Completed): Passage of the SHANTI Act. Repeal of the 1962 Atomic Energy Act and 2010 CLND Act.
• 2026 (March): Deadline for the Bharat Small Reactor (BSR) tender. Major players (Reliance, Adani, Tata) submit bids for 16 identified sites.
• 2026 (Mid): AERB receives statutory status; launches the "One-Window" digital licensing portal for SMR type-certification.
• 2027: Notification of the Nuclear Liability Fund rules, removing "Supplier Liability" and capping operator risks at ₹3,000 crore. SMR projects receive "Infrastructure Status," triggering the first wave of Nuclear Green Bonds.

Phase 2: Pilot Deployment & Captive Power (2028 – 2033)

Focus: Powering AI Data Centres and heavy industry.

• 2028: Launch of the Nuclear PLI Scheme. Indian vendors (L&T, Godrej) begin factory-scale production of SMR modules.
• 2029: Groundbreaking for the first "Coal-to-Nuclear" conversion project at a retired thermal plant site.
• 2030: Commissioning of the Nuclear Energy Mission’s first "Demonstration Unit" (BSR-220).
• 2031: First Captive SMR dedicated to an AI Data Centre cluster goes operational, providing 24/7 carbon-free baseload.
• 2033 Target: 5 Indigenous SMRs (BSR-220 & BSMR-200) operational. Total capacity reaches ~22 GW.

Phase 3: Mass Manufacturing & Scaling (2034 – 2040)

Focus: Standardization and fleet-mode execution.

• 2034: Activation of the Strategic Site Bank; 50+ pre-cleared sites auctioned to private consortia.
• 2035: Commercial launch of Thorium-ready SMRs following successful AHWR (Advanced Heavy Water Reactor) trials.
• 2036: National "Nuclear-Tech" Skilling Mission produces its 50,000th certified private-sector nuclear technician.
• 2038: India begins exporting BSR units to Global South nations under the International Joint Venture framework.
• 2040: Total nuclear capacity crosses 50 GW. Nuclear becomes a "must-run" baseload for the national grid.

Phase 4: The 100 GW Milestone (2041 – 2047)

Focus: Energy independence and Net Zero.

• 2042: Integration of SMRs into a National Smart Grid, allowing decentralized power sharing between industrial hubs.
• 2045: All retired coal plants in India successfully replaced by SMR clusters.
• 2047: The 100 GW Target is achieved. Nuclear power accounts for roughly 25% of India’s total electricity generation, fulfilling the Viksit Bharat vision of energy security.

Summary of the "100 GW Roadmap" (Capacity Projection)

Year	Target Capacity	Primary Driver
2025	~8.2 GW	Existing Large PHWRs
2032	~22.4 GW	Completion of 700MW PHWR fleet
2040	~55.0 GW	Massive Private SMR deployment
2047	100.0 GW	SMRs, Thorium units, and Foreign LWRs

 

 

 

Design Comparison

The following table compares the flagship indigenous designs against leading foreign technologies like the Russian RITM-200 (already operational) and the American NuScale (NRC-approved).

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Comparison: BSR-220 vs. Foreign SMR Technology

Feature	Bharat Small Reactor (BSR-220)	Bharat Small Modular Reactor (BSMR-200)	Foreign SMR (e.g., NuScale/Rosatom)
Technology Base	PHWR (Pressurised Heavy Water)	PWR (Pressurised Water Reactor)	PWR (Light Water Reactor)
Fuel Type	Natural Uranium (Domestic)	Slightly Enriched Uranium (SEU)	High-Assay LEU (HALEU)
Coolant / Moderator	Heavy Water ($D_2O$)	Light Water ($H_2O$)	Light Water ($H_2O$)
Power Output	220 MWe	200 MWe	50–300 Mwe
Siting Focus	Industrial Clusters (Captive)	Data Centres / Smart Cities	Remote/Off-grid/Maritime
Safety System	Enhanced Active + Passive	Fully Passive (Walk-away safe)	Fully Passive
Supply Chain	100% Indigenous (Proven)	70% Indigenous (R&D Stage)	Imported (High Dependency)
Best For	Hard-to-abate sectors (Steel/Alum)	AI/Digital Infrastructure	High-efficiency peak loads

 

Key Technical Insights

The BSR-220: The "Workhorse" Strategy

The BSR-220 is effectively a "shrunk" and modularized version of India's existing PHWR fleet.

• The Advantage: Because it uses Natural Uranium, India does not need to rely on the Nuclear Suppliers Group (NSG) for enriched fuel.
• Manufacturing: Indian companies like L&T already have the blueprints and "N-Stamp" certifications to build these today. This is why the first RFP for BSRs was issued in early 2025—it is the fastest route to adding capacity.

The BSMR-200: The "AI Partner"

The BSMR-200 (and its smaller 55 MWe sibling) is a Pressurised Water Reactor (PWR).

• The Innovation: Unlike the BSR, it uses "Light Water" and Slightly Enriched Uranium. This makes the reactor much more compact—ideal for locating within the high-security perimeters of AI Data Centres.
• Passive Safety: It is designed with an "integral layout" where the steam generators and pumps are inside the reactor vessel, drastically reducing the risk of pipe breaks or coolant leaks.

Foreign SMRs (NuScale/RITM): The "Efficiency Benchmarks"

Foreign designs like Russia’s RITM-200 are already powering icebreakers and floating plants.

• NuScale (USA): Features a "natural circulation" design with no pumps at all, making it incredibly quiet and safe.
• The Trade-off: While these are highly efficient, they require HALEU fuel (enriched to 5–20%), which India currently has limited capacity to produce. Importing these technologies under the SHANTI Bill would likely involve "Fuel Leasing" agreements with the US or Russia.

The "SMR Innovation Hub" (BARC-DAE)

Under the 2025 Budget, ₹20,000 crore was allocated to establish the SMR Innovation Hub. Its primary goal is to close the gap between the BSR (Proven Tech) and the BSMR (Future Tech).

• By 2030: India aims to have its first BSMR-200 prototype operational at Tarapur.
• By 2033: A fleet of at least five indigenous SMRs will be grid-connected.

Driven by the newly enacted SHANTI Act 2025, India is transitioning from a state-run nuclear monopoly to a competitive market to fuel its AI and digital ambitions. By leveraging factory-built Small Modular Reactors (SMRs) like the indigenous BSR-220, the nation aims to provide the 24/7 carbon-free "baseload" power essential for massive data centre clusters. This roadmap addresses critical bottlenecks through private sector participation, standardized "type-certification" licensing, and a pragmatic shift in supplier liability laws. Strategic initiatives, including repurposing retired coal plants and launching a ₹15,000 crore PLI scheme, are designed to build a robust domestic "nuclear-grade" supply chain. Ultimately, this multi-phased strategy targets 100 GW of nuclear capacity by 2047, ensuring energy security and independence for the Viskshit Bharat Vision.