A proposed cut in Goods and Services Tax (GST) rate on Small Modular Reactors (SMRs) to 5% is reigniting attention on India’s emerging nuclear-energy supply chain and companies like BHEL, Walchandnagar Industries and Hindustan Construction Company (HCC) are being watched by investors.
The proposal is being made at the time when India is moving toward nuclear power and putting Small Modular Reactors on the agenda of its long-term energy strategy. The Union Budget 2025–26 earmarked ₹20,000 crore for a Nuclear Energy Mission for research and development of SMRs; by 2033 at least five indigenous SMRs are to be developed.
A lower GST rate, if approved, might cut down on the tax burden of SMR projects and improve project economics. For an emerging technology that requires a lot of upfront investment, lower taxation could enable faster adoption and make domestic manufacturing and deployment more commercially attractive.
The proposal is especially relevant as India is looking to expand nuclear generation greatly over the next two decades. The government has already announced that it plans to reach 100 GW of nuclear power capacity by 2047, and so we see the nuclear sector as a potentially big long-term market for engineering, construction and equipment-manufacturing companies in India.
Why BHEL, Walchandnagar and HCC are in focus
Bharat Heavy Electricals Limited (BHEL) is one of the country’s leading heavy engineers and is an incumbent in the power business. Heavy equipment production capacity is something that would help to drive more nuclear investment as well as domestic equipment demand.
Walchandnagar Industries has an even more direct connection with India’s nuclear manufacturing ecosystem. The company says it has worked with the Department of Atomic Energy, NPCIL and BARC for more than four decades and has provided core equipment for different nuclear-power projects. It is also pre-qualified to supply Class I nuclear components.
Hindustan Construction Company is a major infrastructure and engineering player with extensive experience in nuclear construction. Industry reports have identified HCC among Indian companies that could benefit from the country’s expanding SMR and nuclear infrastructure pipeline.
The possible GST reduction matters beyond tax impact alone. It would also strengthen the investment picture for India’s domestic nuclear supply chain if it is accompanied by faster project approvals, greater orders and greater private sector participation.
The government has already made efforts to develop a greater role for industry in India’s nuclear programme. According to a government update, the SHANTI 2025 Act is to provide for legislative changes that will encourage government-owned and private companies to participate in the peaceful nuclear energy sector but the laws will be put in place only after notification.
India is also moving towards indigenous SMR designs. According to the Department of Atomic Energy, BARC is developing the 220 MWe Bharat Small Modular Reactor (BSMR-200), the 55 MWe SMR-55 and a high-temperature gas-cooled reactor for process heat and potential hydrogen production. The BSMR-200 and SMR-55 have been in-principle approved for engineering and construction.
SMRs are attracting attention due to the fact that they may be more modular in their nuclear generation than traditional large reactors. Their small size and modular form will make them best suited for industrial applications and locations where the large scale nuclear plant is not practical.
And yet investors should differentiate between a proposal and an officially implemented GST reduction. Until the government formally approves and notifies the change, the 5% rate should not be considered as a confirmed tax policy.
The market response could also depend on how quickly India's nuclear projects move from policy announcements to actual orders and construction. Companies linked to the sector will benefit significantly if the country gets into a long-term project execution phase of its operations; the performance of companies in the sector will depend on contracts, order inflows, execution capabilities and financial results.
For now, the 5% GST proposal for SMRs is another policy catalyst to India's nuclear energy story. And with the government’s ambitious goal of 100 GW of nuclear capacity by 2047 and at least five indigenous SMRs by 2033, companies involved in nuclear equipment manufacturing, engineering and construction could be on the investors’ radar, too.
BHEL, Walchandnagar Industries and HCC are among the names of interest as India's nuclear ambitions move towards a more regional industrial ecosystem. If the GST cut is approved, it would strengthen the economic case for quicker deployment of Small Modular Reactors and for companies that are part of their manufacturing and construction supply chain.
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