China is wasting no time in the small reactor great game—India must act fast, work with US

CNNC small modular reactor Linglong One installs heaviest component | Photo: China National Nuclear Corporation

Last year, China reached an important milestone in its small modular reactor programme by successfully installing the core module of the Linglong One SMR in Hainan Province. SMRs like Linglong offer an array of advantages over conventional land-based reactors in terms of size, portability, safety, and cost. The Linglong is just one feature of China’s expanding nuclear energy programme, which is on track to surpass the United States in terms of total nuclear power capacity within the next decade. China has nearly two dozen reactors under construction across the country and the Linglong One’s commissioning is less than two years away.

While China’s civil nuclear programme is central to its renewable energy objectives, the strategic implications cannot be ignored. This is especially true for Indian policymakers who must contend with Beijing’s growing influence in the Indian Ocean. It is only a matter of time before China begins exporting its SMR to countries abroad, including in South Asia. China has a history of assisting Pakistan with its conventional nuclear reactor programme, notably at the Chashma Complex. In recent years, Chinese President Xi Jinping has pushed nuclear energy cooperation with several countries, including France, Hungary, Russia, and the Gulf.

Exportable SMRs will offer China another tool to expand its influence overseas, creating decades-long dependencies through fuel and maintenance contracts. There is the risk of recipient nations compromising their sovereignty through unsustainable financing, similar to the Hambantota Port debacle in Sri Lanka. As Ambassador Geoffrey Pyatt, the State Department Assistant Secretary for Energy and Natural Resources, has stated: “U.S. civil nuclear cooperation and American companies must be expanded to give countries a viable alternative to lower-standard PRC [People’s Republic of China] and Russian nuclear cooperation engagements…Civil nuclear partnerships are strategic and solidify 60-100-year relationships, due to the long-term operating capacity of civil nuclear power plants.”

Furthermore, US officials have raised alarm over China’s plans to build floating nuclear reactors, including in disputed areas like the South China Sea. SMRs are the base technology for floating nuclear power plants or FNPPS. India needs to take seriously the prospect of a Chinese-origin SMR at its doorstep, potentially even in a disputed territory or along the Indian Ocean littoral.

India’s window of opportunity

Time is of the essence. New Delhi cannot beat Beijing to the punch on SMRs if it pursues policies only geared toward promoting state programmes. While India’s domestic nuclear energy programme has made impressive strides, particularly related to pressurised heavy water reactors, outside collaboration can be a force multiplier and speed up timelines for SMR deployment. The need of the hour is for India to forge an ambitious SMR public-private partnership with the US– the country that spearheaded the exception for India at the Nuclear Suppliers Group 16 years ago and brought it into the global nuclear mainstream.

During Prime Minister Narendra Modi’s state visit to Washington in June 2023, he and President Joe Biden agreed to “facilitate India-U.S. collaboration in nuclear energy, including in development of next-generation small modular reactor technologies in a collaborative mode”. A year later, however, little progress has been made, with policy hurdles and bureaucratic inertia hindering both sides.

With Modi’s return to power for a third term in the recent Lok Sabha election, the Indian government has a unique window of opportunity to inject new momentum into its civil nuclear cooperation with the US. An important element of this would be addressing long-standing policy and regulatory challenges, such as India’s nuclear liability law, which has vexed New Delhi and Washington for over a decade.

The Indian government is reportedly considering policy remedies to allow greater private-sector participation in the country’s nuclear power sector, a move that would be welcomed by American and Indian industry alike. A conducive business environment can clear the way for an ambitious SMR partnership with the US, which in turn can advance New Delhi’s interests on multiple fronts.

Five major potential wins

First, India stands to gain access to world-class American technologies in the SMR sector. Take for example the SMR-300, which was designed by New Jersey-based Holtec International and is among the most innovative SMR designs globally. It is an air-cooled reactor, which means it requires no large footprint for water storage and can operate in arid environments. Furthermore, it can make use of existing infrastructure at coal-fired plants, reducing the need for new land. Notably, the US Department of Energy recently approved support for an SMR-300 pilot at the Palisades Generating Station in Michigan.

Second, an SMR collaboration would fulfil the promise of the US-India civil nuclear deal, which envisioned US nuclear companies entering India to provide clean and reliable power. As Dr Ashley Tellis writes, realising the full potential of the civil nuclear deal would carry both symbolism and substance and help catalyse new areas of bilateral cooperation. It would also be a feather in the cap for Modi in his third term, cementing his legacy as the Indian leader who brought the landmark civil nuclear deal to its logical conclusion. This is all the more salient given the bipartisan support for the deal in both India and the US.

Third, it promises India a means to onshore a critical manufacturing ecosystem and demonstrate renewed leadership in the fight against climate change. Whether it is the Quad to the East or the India-Middle East-Europe Economic Corridor (IMEC) to its West, an SMR ecosystem gives New Delhi a potent tool to advance clean energy goals with close partners, including in the ‘Global South’.

Akin to the India-led International Solar Alliance, a regional SMR grouping with India at its centreprovides a compelling vision to advance the country’s climate and foreign policy objectives – an “SMRs for Peace” for the 21st century, so to speak. Additionally, Holtec already has a manufacturing plant in Gujarat,which is primed for expansion, making an SMR partnership consistent with Modi’s Atmanirbhar (self-reliant) vision for India and creating thousands of engineering jobs in both India and the US.

Fourth, SMRs are crucial building blocks for the India of tomorrow. For instance, two of Modi’s signature National Missions – Green Hydrogen and Artificial Intelligence – will necessitate large amounts of clean energy to fuel electrolysers and data centres. The AI revolution is increasingly raising concerns about the carbon footprint of the underlying data centres. A decade ago, a typical data centre required an average of 10 megawatts of power. Today, the average is 100 MW and continues to rise. If India is to achieve its technological and manufacturing aspirations while meeting its Paris Agreement commitments, reliable and readily deployable SMRs are essential for the country’s energy mix.

Last, Washington and New Delhi increasingly view high-technology cooperation as a key aspect of their bilateral strategic partnership. For example, the US-India Initiative on Critical and Emerging Technologies (iCET), launched in 2023 by the national security advisors of both countries, has made significant progress toward galvanising technology cooperation, including a major co-production effort for General Electric jet engines.

As both capitals seek new ideas to populate the iCET roadmap, a partnership on SMRs presents a logical next step. There could even be anSMR line of effort under the auspices of the Quad (U.S.-India-Australia-Japan). In a welcome trend, the US has started supporting SMR projects abroad through financing efforts by the US Export-Import Bank (EXIM) and the U.S. International Development Finance Corporation (DFC).

Embracing the SMR mantle presents India with a significant opening to shape the international strategic environment in its favour. This will require leadership by policymakers in both Washington and New Delhi, but India must be the one to lead the charge given what is at stake in its neighbourhood. When President Biden and Prime Minister Modi next meet – the Quad Leaders Summit is one possibility – SMRs must be on top of the agenda. Beijing is wasting no time in the SMR great game. Given the stakes, neither should New Delhi and Washington.

Basant S. Sanghera is a Principal at The Asia Group. He has extensive experience spearheading diplomatic initiatives to strengthen the US-India strategic and commercial partnership. Views are personal.

(Edited by Zoya Bhatti)