In April, India announced that it had marked a major milestone as its indigenously designed and built Prototype Fast Breeder Reactor (PFBR) at Kalpakkam in Tamil Nadu had successfully attained its first criticality.

Larsen & Toubro (L&T), India’s largest engineering conglomerate, helped build this.

For L&T, nuclear energy has been a long-awaited story. Its nuclear venture dates back to the 1960’s, with periodic bursts of work, but longer spells of lull.

The past year has been a tale of two comebacks – India is trying to catch up on lost time on nuclear energy expansions. And in this thrust to expand nuclear energy, India is aiming to achieve a global comeback of fast breeder reactors. As India plans a trillion rupees per annum worth of comeback for nuclear energy, L&T stands to gain significantly.

Driven by India’s ambitious target to scale its nuclear capacity to 100 GW by 2047 and new policy reforms like the SHANTI Act of 2025, L&T stands to significantly revive its long-dormant nuclear manufacturing segment.

By strictly focusing on high-margin engineering, procurement, and construction (EPC) services rather than asset ownership, the conglomerate is uniquely positioned to capitalise on this trillion-rupee annual market while insulating itself from the financial risks typical of the sector.

Catching Up On Fast Breeders

Globally, fast breeders had a quiet death in the 1970’s over a host of issues related to costs and operations. The same challenges hold true from a business point of view for nuclear energy as a whole.

L&T has been explicit in its interest in building but not owning or operating nuclear power assets. This EPC focus, industry experts suggest, could help the engineering giant build profits, where the economics of it are yet to turn favourable otherwise.

The greatest selling point for fast breeder reactors is their ability to self-generate more fuel from their spent fuel, once the nuclear reaction gets started. It solves for both the scarcity of fuel to run nuclear plants and the concerns over handling the waste left after. If successful, India would be the second country, after Russia, to operate a commercial PFBR.

India is attempting this with a 500 MWe (MegaWatt electrical) reactor. Achieving first criticality, the one reported in April, signifies achieving the first complete full chain of nuclear reaction.

Patents related to nuclear technology are held by establishments under the Department of Atomic Energy (DAE). However, further success on this front, along with the national-level push for overall nuclear energy, particularly small reactors, could help L&T finally build its nuclear segment.

L&T’s Nuclear Aspirations

L&T’s nuclear ambitions have been languishing for long, while the others, such as hydrocarbons and infrastructure, have galloped. Galloped fast enough for L&T to have the largest order book in the country of more than Rs 7.4 trillion.

L&T does not disclose a separate number for its nuclear segment orders, but counts it under heavy engineering, which itself cloaked a modest Rs 5,000 crore order inflow in FY25.

In two subsequent interviews with this writer – one in 2017 and another in 2023 — L&T’s former chairman AM Naik had lamented on how nuclear has not moved at all, and it is a challenge segment not just for L&T, but for India, and L&T’s nuclear energy shopfloors were lying idle, being used for other businesses. This, hopefully, could change if India finally follows through on its nuclear energy ambitions.

A Renewed Policy Push

The reason L&T’s nuclear portfolio lagged before, and that it is up for a revival now, are both linked to how India views nuclear energy. Globally, there is a renewed push for this source of energy, which is infamous for the risks associated.

India is also making fresh attempts. The government of India has enacted ‘The Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act, 2025, which aims to consolidate and modernise India's nuclear legal framework, enable limited private participation in the nuclear sector under regulatory oversight and open new avenues for collaboration and investment.

The new Act is seen as more favourable in limiting the liability hurdle for private participation. As partners at JSA Advocates and Solicitors noted in a law journal, “....SHANTI Act does not retain the operator’s right of recourse against suppliers; this must now be determined contractually between the parties.”

The liability amount differs based on the size of the reactor, with the highest tier set at Rs 3000 crore. The limiting liability amount is also an aspect that is currently being challenged at the Supreme Court.

“In recent years, nuclear energy in India has attracted growing interest from large business groups due to a combination of policy visibility, demand-side shifts, and structural changes in the energy system,” Vikas Gaba, Partner and National Head - Power and Utilities, KPMG in India, told The Core.

“A key driver is the Government’s clearly articulated commitment to scale nuclear capacity to 100 GW by 2047, which gives long-term certainty in a sector where asset lives span several decades,” Gaba said.

Market for L&T

Anil V Parab, whole-time Director & Senior Executive Vice President (Heavy Engineering & Manufacturing) at L&T, puts the likely opportunities at an industry level in plain numbers.

“This (100 GW by 2047) will translate into approximately Rs 1 lakh crore of investment annually till 2047,” Parab told The Core.

While Parab declined to share what size he expects L&T’s nuclear business share in its overall order book to grow, he said, “L&T will continue to be the leader and industry trendsetter.”

The company, in recent times, has said in media interactions that it expects its nuclear business revenue to grow three times in the next five years. L&T does not disclose separate segment financials for sub-segments like nuclear.

Parab also offered a sliced view of the market available under the nuclear play. He said the broad composition of these orders seen under the 2047 plan is expected to be 40–45% PHWRs (pressurised heavy water reactors), 35–40% PWRs (pressurised water reactor), 5% FBRs (fast breeder reactors), and 10–15% SMR ( small module reactors). So far, of these, SMR appears to have seen more traction, with even Parab highlighting “NPCIL and BARC are preparing to invite bids for the first 220 MWe standardised design of the Bharat Small Modular Reactor (BSMR-200) in the next three to six months. This represents a project value of approximately Rs 5,960 crores as per their estimates.”

Further, with the tiered liability structure of the new Act, small reactors may gain popularity, with interest expected from some of India’s large conglomerates.

Even though the Act mentions ‘ limited private participation’, L&T stands to gain from its EPC position, as contractor to both private and public operators. L&T's competition is limited to state-run BHEL in the EPC segment for nuclear.

Parab, in other media interactions, has noted intent to expand L&T’s nuclear ambitions both for the domestic and export markets.

What Next?

The nuclear energy sector in general, and the fast-breeder reactor in particular, both come with their own set of challenges. Fast breeder reactors were attempted in a couple of European countries more than five decades ago, but failed to succeed.

“The primary challenges were the safety of liquid sodium, high CAPEX, and the need for the highest standards of workmanship in special metallurgy,” Parab listed the challenges of the past, adding, India has adopted a pool-type reactor design, which uses natural circulation for cooling in case of power failure, mastered the management of liquid sodium, which is highly reactive with air and water, indigenously developed metal alloys that resist long-term corrosion, to solve for these challenges.

He added, “Indian industry has developed strong nuclear-quality workmanship standards over decades of nuclear apartheid, which have been deployed to the fullest extent in this indigenous advanced nuclear technology.”

Besides the operational challenges, great returns are far from being commonplace in this sub-segment of the energy business. “Nuclear energy in India is best seen as a sector transitioning ... .to one that can support commercial participation under well-defined structures….rather than a high-return, market-driven business in the near term,” Gaba from KPMG said.

Moreover, EPC and manufacturing, and services related to nuclear power, are already commercially attractive, particularly as scale increases and standardisation improves.

“For ownership and operation, nuclear projects are unlikely to offer high or rapid returns; instead, they are better characterised by stable, utility-like cash flows over long-time horizons, dependent on long-term offtake arrangements, appropriate risk allocation, and access to patient capital,” Gaba said. Perhaps, L&T remains cognizant of this, limiting its nuclear ambitions to only developing it, away from asset ownership.