Union Budget 2026: Zero customs duty for nuclear power imports till 2035

The Union Budget presented by Nirmala Sitharaman removes a key cost barrier for nuclear projects as India prepares for a major capacity expansion and opens the sector to private participation

Finance Minister Nirmala Sitharaman announced a change in the Union Budget 2026 that could reshape India’s nuclear manufacturing landscape. The government proposed extending the basic customs duty exemption on imports of goods required for nuclear power projects up to the year 2035.

 

The exemption of the levy for eligible goods used across all nuclear plants, regardless of capacity has been extended. This move, the government says, will support manufacturing requirements critical to expanding nuclear energy infrastructure.

 

“I propose to extend the existing basic customs duty exemption on imports of goods required for Nuclear Power Projects till the year 2035 and expand it for all nuclear plants irrespective of their capacity,” Sitharaman announced in her Budget speech.

 

Nuclear policy shift amid push for private investment 

The customs duty exemption comes amid New Delhi's ongoing efforts to establish new regulations for nuclear sector operations, which will permit private companies to enter the market. The Atomic Energy Act of 1962 established state control over India's civil nuclear industry, which has operated until now under Nuclear Power Corporation of India Limited (NPCIL) management.

 

However, recent efforts to widen the ambit of entry into the nuclear sector, including the Atomic Energy Bill, 2025 (or SHANTI Bill), aimed to open up nuclear power development and operation to private firms for the first time, subject to safety and liability safeguards. Proponents argue this will unlock capital, technical innovation and project delivery capacity necessary to rapidly scale up nuclear energy. 

 

What the duty cut means for nuclear manufacturing 

The removal of customs duty on nuclear project imports will directly affect components, equipment and specialised machinery that domestic manufacturers like MEIL, L&T, BHEL, among others, currently import to build nuclear units or their supporting infrastructure.

 

By lowering input costs, the policy is expected to enhance the competitiveness of India’s nuclear supply chain, improve cost structures for project developers and potentially attract international original equipment manufacturers to partner with Indian entities. The duty exemption effectively gives extended policy certainty to investors and suppliers through 2035, reducing one of the cost barriers associated with capital-intensive nuclear projects.

 

Who stands to benefit the most from this 

Nuclear machinery & component makers, including domestic Engineering, Procurement, and Construction (EPC) and heavy-engineering firm,s may see a rise in scale and demand. Meanwhile, global reactor suppliers could also see India as a more predictable import market under zero duty for qualifying goods.

 

And with private participation enabled, smaller firms and SMR (small modular reactor) developers may benefit from lower capital equipment costs.

 

India’s current nuclear reactors and capacity 

According to the latest, India operates 24 nuclear reactors with a combined capacity of around 8780 MW as of 2025. While nuclear accounts for a small share of the total electricity mix (3 per cent), it remains a strategic source of low-carbon baseload power.

 

Along with this, 8 additional reactors, with a total capacity of around 6,600 MW, are currently under construction. Union Minister Jitendra Singh had informed the parliament in December 2025 that further projects are at various planning stages. Beyond this near-term build-out, India has set long-term targets to reach 22 GW by 2032 and as much as 100 GW by 2047, signalling a major expansion of atomic capacity over the next two decades.

 

As cost pressures ease and private capital enters the market, there is an expectation of a greater pace in deploying new nuclear capacity.