Indian Prime Minister Narendra Modi and Russian President Vladimir Putin at the Joint Press Statements, at Vladivostok, in Russia on September 04, 2019.

During the recently concluded Annual Summit between Prime Minister Narendra Modi and President Vladimir Putin at Vladivostok, the two leaders reviewed the bilateral civil nuclear energy cooperation and expressed an overall satisfaction at the progress achieved in the Russian-designed Kudankulam nuclear power plant (KKNPP) in India. Currently, the construction work on unit 3&4 of the Kudankulam plant is moving at a full pace and the Russian side is eying on an opportunity to build additional units at a new site. At Vladivostok Summit, President Putin hailed the KKNPP as a ‘flagship joint project’ and reiterated the vision for building as many as 12 nuclear plants over the next 20 years within the framework of existing agreements. In addition, the joint statement issued at the end of the summit welcomed the “continuation of technical discussions on the VVER 1200 of the Russian design and joint manufacturing of equipment and fuel”.

From the Indian standpoint, the preference for “joint manufacturing” for the ongoing and future Russian-built NPPs is significant for two important reasons. First, there is strong expectation in New Delhi that nuclear cooperation with Moscow would significantly enhance “Indian manufacturing content” and would boost the domestic manufacturing industry. Under PM Modi’s flagship ‘Make-in-India’ policy, the Indian policymakers are keen on leveraging investments in the nuclear sector for supporting the domestic industry. The localisation goals are also important from the standpoint of India’s Science, Technology and Innovation (STI) policies, which are not only aimed at upgrading India’s technological and industrial base through innovation-oriented procurement but also complement the national manufacturing policies.

Secondly, the emphasis in local manufacturing also appears to be in line with India’s decision to augment domestic industrial capabilities in Light Water Reactors (LWRs). At present, India lacks the industrial specialisation in LWRs as opposed to the indigenously developed Pressurised Heavy Water Reactors (PHWRs). The PHWRs have been the mainstay of India’s three-stage nuclear programme for the past several decades and contributed to the growth of Indian domestic nuclear industry. Over time, the Indian industry has successfully acquired capabilities to develop major reactor components, sub-systems, and assemblies through ‘print’ and ‘specifications’. Besides PHWRs, the Indian industry also successfully fabricated the components for country’s first industrial-scale prototype fast breeder reactor (PFBR) and is also expected to play a role in the development of Thorium stage of the Indian nuclear power programme.

Notwithstanding such achievements, the Indian nuclear industry has long bemoaned the lack of consistency in orders from the Nuclear Power Corporation of India Limited (NPCIL), which is responsible for building nuclear plants in the country. The inconsistent domestic demand has led the Indian industry to face high attrition of skilled manpower and the depletion of capabilities built specifically for nuclear applications.

As a consequence, the industry has been calling for streamlining the orders, and capital flows to sustain the domestic industrial capabilities acquired assiduously over the years. For the Indian policymakers, the orders flowing from LWRs can give a leg-up to Indian companies and keep the Indian workforce meaningfully employed in the nuclear sector. For such reasons, the Indian industry has been eying on manufacturing opportunities arising from increased indigenisation of imported LWR technologies.

The Rosatom, on its part, too has recognised India’s growing preference for indigenising the VVER-1000 supply chains. In fact, the joint manufacturing proposals have become a common feature in Russia’s nuclear reactor exporting strategies to countries such as China, India, Turkey, and Iran where Russia is building nuclear plants. As Russia seeks to aggressively capture the space vacated by Western nuclear companies, its offer for building NPPs to aspiring nuclear countries such as Bangladesh, Vietnam, and Egypt also entails proposals for aiding the domestic industrial development.

With the opening-up of India’s nuclear market for civil nuclear trade after the exemption from nuclear suppliers group (NSG) in 2008, all the leading global nuclear suppliers have signed agreements with New Delhi for building NPPs in India. Sensing the completion from rival suppliers, the Russian government have offered to localise the production of major reactor components and sub-systems for building new NPPs in India. In this context, President Putin in his 2014 visit to New Delhi made a strong pitch that nuclear export to India “is not just trading goods or services or even technology – it is the creation of an entire industry, a new industry for India.”

As a result, the two countries formally incorporated “localization of manufacturing of equipment and fuel assemblies” in Indo-Russian strategic vision document signed in 2014, which laid the ground for the construction of the third and fourth unit at the Kudankulam Plant. As a supplement to the vision document, the two sides also agreed on a joint roadmap titled, “Localization of Manufacturing in India for the Russian-Designed Nuclear Reactor Units” which provided for indigenous manufacturing of equipment and fuel assemblies for Russian-engineered nuclear plants in India.

Although the indigenous content in the KKNPP unit 1&2 was minimal, the Rosatom has repeatedly reaffirmed its commitment to progressively enhance domestic value addition in the remaining units. A study by NPCIL, in this regard, has indicated a planned increase in the construction and manufacturing workshare for Indian companies in KKNPP Unit 3-6. Although the critical components like reactor pressure vessels, coolant pumps, steam generators, etc., will be supplied by Russian companies, the share of Indian industry in manufacturing equipment in Turbine Island and the Balance of Plant (BoP) is expected to increase to over 50 percent in addition to prospective local production of nuclear fuel rods for KKNPP and future units. Besides, the two countries are also reportedly been in talks for undertaking serial construction to achieve substantive scale advantages in the construction of future NPPs in India.

In sum, New Delhi appears to be exploring maximum opportunities for joint manufacturing in the existing as well as future Russian NPP projects. Although the civil nuclear energy cooperation has traditionally been an important part of Indo-Russian strategic ties, today the economic considerations are increasingly shaping the contours of this partnership. In the past, the non-proliferation sanctions imposed by the western countries increasingly drove New Delhi to seek nuclear assistance from the former Soviet Union and later the Russian Federation. However, with India coming out of the shackles of non-proliferation sanctions, New Delhi is now keen to balance its domestic industry goals in furthering civil nuclear partnership with Russia. Accommodating New Delhi’s preferences will go a long way in boosting the time-tested Indo-Russian atomic partnership’ and to achieve genuine partnership, as affirmed by Prime Minister Modi.

The author is Associate Fellow at the Vivekananda International Foundation, New Delhi