Significant discussion about the dynamics of regional security in South Asia has been sparked by Holtec International’s recent approval to transfer Small Modular Reactor (SMR) technology to India. This historic ruling marks a significant change in U.S.-India nuclear cooperation and effectively resurrects the long-stalled Indo-US Civil Nuclear Agreement. Opponents, especially in Pakistan, have voiced grave concerns about regional stability, nuclear security, and geopolitical ramifications, while supporters see this as a strategic partnership advancing clean energy goals. This study looks at the deal’s details, considers security issues from several angles, and assesses the wider implications for South Asia’s strategic balance.
Holtec International, a prominent international nuclear technology company, received approval from the US Department of Energy on March 26, 2025, to transfer small modular reactor (SMR) technology to India. This significant advancement makes it possible for Holtec to share “unclassified small modular reactor technology” with its regional subsidiary Holtec Asia, as well as with Indian firms Larsen & Toubro Ltd. and Tata Consulting Engineers Ltd. The approval has certain restrictions, most notably that the jointly developed nuclear technology cannot be transferred to third countries or other Indian entities without the express permission of the US government.
The Indo-US Civil Nuclear Agreement, also referred to as the 123 Agreement, was first signed in 2007 by President George W. Bush and then-Prime Minister Manmohan Singh. The Holtec deal essentially revitalizes it. Notwithstanding its initial promise, a number of legal and regulatory obstacles caused the agreement to be implemented with considerable delays that lasted for almost 20 years. During this period, the nuclear cooperation between the two countries remained largely theoretical rather than practical.
In contrast to conventional large nuclear plants, small modular reactors are an emerging nuclear technology that offers scalable, flexible power generation with improved safety features. Their modular design enables gradual capacity additions, and their small size makes them appropriate for areas with inadequate infrastructure. This technology transfer reflects Washington’s increasing strategic alignment with New Delhi and marks a significant evolution in US-India energy cooperation.
The Council on Foreign Relations has identified that US interests in South Asia, while “not vital,” are “important and increasing,” encompassing goals such as preventing major war, limiting nuclear proliferation, expanding economic ties, and promoting democratic institutions. The post-Cold War environment has created opportunities for substantial improvement in bilateral relations between Washington and both New Delhi and Islamabad. However, realizing these opportunities requires “more creative thinking and skilful diplomacy than has been the norm”.
US policy experts have argued that it is “both possible and desirable to delink the two bilateral relationships and transcend the zero-sum dynamics that have often plagued the region” by promoting the expansion of bilateral economic, political, and military ties with both India and Pakistan at the same time. The policy recommendations specifically address India and include recognizing its “growing power and importance,” sustaining high-level diplomatic engagement, reducing restrictions on transfers of dual-use technology, boosting military cooperation, and assisting India’s integration into regional institutions.
The US-India nuclear deal has alarmed Pakistan, which views it as a destabilizing event that jeopardizes the balance of regional security. The concerns expressed from Islamabad revolve around a number of important topics that demand careful consideration.
According to Pakistan, the technology transfer could cause the region’s strategic balance to change. The SMR agreement is seen by Pakistani critics as more proof that Washington is putting its strategic alliance with India ahead of Pakistan, especially as part of a larger containment strategy aimed at China. The fact that Pakistan, which has long aimed for nuclear parity with India, has not received comparable offers of nuclear cooperation serves to support this view.
The development takes place in the context of South Asia’s nuclear history, in which, in spite of international efforts to prevent the spread of nuclear weapons, both India and Pakistan became de facto nuclear weapons states. Although it is “extremely unlikely” that these nations’ nuclear status will be reversed, US policy experts have stated that “establishing a more stable and sustainable plateau for Indian and Pakistani nuclear relations” should be the main priority. This would entail pleading with both countries to abstain from exporting sensitive technologies, deploying weapons, and conducting nuclear tests.
Opponents of the agreement raise concerns about the wisdom of India’s nuclear capability expansion by citing purported cases of nuclear material theft and security breaches. Pakistani sources claim that there have been several instances in India where radioactive materials have ended up in the wrong hands. The Express Tribune recently reported on the arrest of three people in the Gopalganj district of Bihar after they were discovered in possession of 50 grams of suspected radioactive caliornium. The article mentions “multiple incidents of theft and illegal sale of nuclear and radioactive materials in India” and asserts that this is “not an isolated case.”
But it’s crucial to remember that claims about India’s nuclear security must be carefully considered, taking the sources into account. Some media outlets covering these events, like Kashmir Media Service (KMS), have been described as propaganda tools based in Pakistan that spread false information about India instead of being reputable news sources. The KMS “strongly presents the viewpoint of the Pakistanis and the separatists” and has been described as “a mouthpiece of the separatist camp in Kashmir.”
The changing geopolitical landscape in the Indo-Pacific area must be taken into consideration when analyzing the US-India nuclear agreement. Washington and New Delhi’s growing strategic alliance is a reflection of their shared worries about China’s increasing assertiveness and influence throughout Asia.
The transfer of SMR technology helps the US achieve a number of strategic goals. India, which US policy experts believe has “the potential to emerge as a full-fledged major power,” is strengthened in the first place. Second, it may present US nuclear technology companies with substantial business prospects in one of the biggest energy markets globally. Third, it sets the US up as a check on Russian and Chinese nuclear technology exports, which have been gaining traction around the world.
Based on “shared values and institutions, economic collaboration including enhanced trade and investment, and the goal of regional stability across Asia,” the US strategy seems to be in line with policy recommendations to “propose a closer strategic relationship with India.” Beyond nuclear technology, this collaboration includes efforts for economic integration, maritime security, and defense alliances.
The growing nuclear cooperation between the United States and India is seen by Beijing as a worrying step in what it sees as Washington’s containment strategy. As a strategic counterbalance to India, China has long maintained strong ties with Pakistan, offering support for its missile and nuclear projects. This dynamic may be accelerated by the Holtec agreement, which would strengthen China’s incentives to strengthen its ties with Pakistan.
The Holtec SMR deal demonstrates the difficult task of striking a balance between non-proliferation goals and justifiable energy development needs. With its enormous population and expanding economy, India has significant energy needs that clean nuclear power may be able to help with. However, the international community continues to have legitimate worries about the spread of nuclear weapons in a historically unstable area.
India’s energy landscape could benefit from small modular reactors in a number of ways. In comparison to fossil fuel alternatives, they can reduce emissions and provide dependable baseload power by supplementing renewable energy sources. Compared to large conventional nuclear plants, their modular design and smaller size allow for more flexible deployment and possibly lower upfront capital costs. SMRs are a useful technological choice for a nation trying to support economic growth while meeting the goals of the Paris Climate Agreement.
Since its beginning, the US-India nuclear cooperation has generated controversy from a non-proliferation standpoint. India developed an autonomous nuclear weapons program outside of international safeguards, carried out nuclear tests in 1974 and 1998, and never signed the Nuclear Non-Proliferation Treaty (NPT). The 2007 deal was an exception to the US’s long-standing non-proliferation policy, which was supported by India’s strategic significance and responsible nuclear behavior.
Important protections are included in the Holtec agreement, most notably the prohibition against technology transfer to third parties without US approval. This restriction allows for controlled cooperation while reflecting persistent non-proliferation concerns. Critics contend that these agreements reward a state that developed nuclear weapons outside of the framework of the NPT, undermining the global non-proliferation regime.
A major shift in bilateral ties and the security dynamics of South Asia can be seen in the US’s approval of Holtec International’s transfer of SMR technology to India. The agreement raises valid concerns regarding regional strategic balance, nuclear security, and non-proliferation goals, even though it could be a step forward in the development of clean energy.
Perceptions of strategic isolation and US favoritism toward India are strengthened for Pakistan by the development. These issues should be carefully examined in the context of a larger diplomatic framework that takes a comprehensive approach to regional security. A zero-sum strategy is neither required nor advantageous, according to US policy experts, who advise Washington to “significantly expand its bilateral economic, political, and military ties with India and Pakistan simultaneously.”
Important obstacles still need to be overcome as the agreement progresses: maintaining suitable nuclear safeguards, preventing regional arms racing, encouraging Indo-Pakistani communication, and guaranteeing strong nuclear security measures. Whether the US-India nuclear partnership promotes regional stability or exacerbates already-existing tensions in an already complex security environment will depend on how well these obstacles are overcome.
