India Looks to FDI to Boost Nuclear Energy Sector
By Ian Bhullar
Jun. 18 – Indian Minister of State in the Prime Minister’s Office, V Narayanasamy, backed plans last week for the country’s nuclear energy sector to be opened to foreign direct investment.
“We should agree to FDI. We should open up,” Narayanasamy said while speaking to the Associated Chambers of Commerce and Industry.
This support comes five months after Commerce and Industry Minister Anand Sharma suggested that India will receive over US$100 billion towards foreign investment in nuclear energy over the next 20 years.
Such a move will aid government plans to increase generation of nuclear energy from current levels of 4,800 megawatts to 63,000 megawatts by 2032. Indeed, Narayanasamy’s suggestion follows Prime Minister Manmohan Singh’s own targets, announced a week earlier, for India’s nuclear power capacity to increase by 2,000 megawatts within the next year. This increase is to be wholly covered by the Kudankulam atomic power project based in Tamil Nadu, although the project has faced delays due to local protests and a consequent violent backlash from authorities.
Civil society bodies are increasingly vocal in opposition to nuclear projects. Among numerous cases across the country, the 9,900 megawatt Jaitapur project in Maharashtra – a project using reactors built by French nuclear giant Areva – faced violent protests in 2011 from locals concerned about both the dangers of nuclear technology and obstruction of access to farmland and fisheries.
Protestors were supported by political parties including the Maharashtra nationalist party Shiv Sena, and were helped by policy-makers lacking in credibility – Indian nuclear officials previously argued against the seriousness of the Fukushima disaster and have glossed over the deaths of nuclear workers in the Madras Atomic Power Station at Kalpakkam.
Nevertheless, demonstrating continued foreign interest in the sector, Narayanasamy’s announcement also comes as U.S.-based nuclear supplier Westinghouse Electric Co. signs a memorandum of understanding with the Nuclear Power Company of India Ltd. The memorandum aims at construction of nuclear power plants in western India and, particularly, the site development work for the Gujarat-based Mithivirdi site, which is proposed to have six 1,000 megawatt reactors.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
You can stay up to date with the latest business and investment trends across India by subscribing to The India Advantage, our complimentary update service featuring news, commentary, guides, and multimedia resources.