The Canada-India uranium deal explained

In today’s Finshots, we explore why Canada and India are on the verge of signing a $3 billion uranium supply deal.

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The Story

In a earlier story on India’s renewable energy transition, we argued that if a power source is meant to anchor a modern grid, it must tick three boxes:

1. Predictability: The ability of a power source to deliver electricity reliably and on schedule, so that grid operators can match supply with demand without great uncertainty.
2. Scalability: The ease with which a power source can be expanded to meet rising demand without combating land or resource constraints.
3. Low Carbon Emissions: The degree to which a power source limits greenhouse gas emissions over its full life cycle, from construction and fuel extraction to operation and decommissioning.

Nuclear power happens to check all three boxes, which is why it keeps returning to the policy conversation whenever countries start worrying about long-term energy needs.

Today this brings us to the proposed uranium deal with Canada, a deal worth nearly $3 billion and very significant in ways the headlines don’t immediately reveal.

India’s uranium requirement is already well beyond what domestic mines can reliably supply. Domestic production stands at approx 600 tons annually, while the demand for reactor is expected cross 1880 tons. However, meeting that demand is not just a matter of acquiring more uranium. We need to obtain good quality uranium.

You see, most of India’s uranium reserves are low grade. This means the ore contains a smaller concentration of usable uranium and requires more processing to extract fuel.

Apart from this, the uranium extracted from mines in Andhra Pradesh or Jharkhand can work well for India’s indigenous pressurized heavy water reactors (PHWRs), which use expensive heavy water (D)₂O) and is designed to operate on abundant natural uranium (U-238). But our nuclear program is no longer limited to these reactors alone.

Over the years, we have added light water reactors, including Russian-designed VVERs and other imported designs. These reactors use regular water (H₂O) and runs on low-enriched uranium (U-235), a fuel that we currently do not produce on a large scale domestically. While India has enrichment capacity for strategic purposescivilian nuclear expansion relies on imported enriched fuel. As India adds more of these reactors, our dependence on foreign uranium inputs increases, regardless of what domestic production numbers suggest.

This is where Canada comes into the picture.

Because Canada sits on some of the world’s largest uranium reserves, but more importantly, it produces some of the highest grade uranium anywhere. The Cigar Lake mine, operated by Cameco, has the highest grade uranium deposit in the world. Higher grade ore means less rock to process, more consistent fuel quality and greater overall reliability. For a country that plans to gradually expand nuclear power over decades, that reliability matters as much as volumes.

The deal also reflects the nature of uranium markets themselves. Unlike coal or crude oil, uranium is not something you can easily buy on the spot market during shortages. It is tightly regulated, traceable from mine to reactor, and wrapped in international safeguards. Long-term supply contracts are the norm, not the exception, and are as much diplomatic agreements as commercial. The acquisition of such a contract indicates trust and alignment at the state level, especially in a sector closely linked to national security.

It is also worth explaining what is actually being sent.

Uranium imports usually arrive as uranium ore concentrate, called yellow cake. This is not reactor-ready fuel. For India’s heavy water reactors, this material can be produced into fuel with relatively limited processing, since those reactors use natural uranium. For light water reactors, additional steps such as conversion and further enrichment are required before the fuel can be used.

Seen through this lens, the Canada deal is not about filling a short-term supply gap, but about securing reliable inputs for a nuclear roadmap that extends well beyond the current decade.

And that future is no longer just hypothetical. The global data center boom is already changing how energy is consumed. Google and amazon investigate small-scale nuclear reactors to power data centers because they need electricity that is constant, clean and available 24×7. Solar and wind help, but they cannot guarantee 24×7 production.

So India sits at an interesting crossroads here. It has favorable policies for data centers, a growing demand for digital infrastructure and a renewed push for small modular reactors. As demand for computing increases along with electrification, nuclear power is increasingly viewed not just as grid support, but as dedicated on-site energy infrastructure.

The government has repeatedly stated its intention to significantly expand nuclear capacity by 2047. This is part of a broader effort to decarbonize the grid without compromising reliability. And that ambition requires fuel security years in advance, not ad hoc purchases.

There is also a diplomatic subtext that makes the deal more interesting. Just months ago, India and Canada were locked in heated disputes. Trade talks were interrupted, diplomats were withdrawn and relations appeared strained.

Yet both sides are now preparing to sign a long-term agreement covering one of the most sensitive commodities in world trade. That contrast highlights how strategic energy considerations often trump political turmoil, especially when both sides see mutual benefit.

The timing also aligns with a series of domestic policy shifts in the nuclear sector. In the latest budgetthe government has extended exemptions from customs duties on goods imported for nuclear power projects until 2035, a move aimed at reducing costs for reactor projects.

Policy changes in recent years have even opened the door to greater participation in the private sector in nuclear power. The government has also launched a dedicated program to finance small modular reactorswhich promises lower upfront costs, easier containment and reduced outage risks compared to large traditional plants.

Another important point to note is that nuclear power has always suffered from an inverse survivorship bias, rarely attracting attention unless something goes wrong, and it competes poorly for public affection against solar and wind. Yet behind the scenes, India methodically prepared for a greater nuclear role by investing in reactors, adjusting regulations, encouraging private participation and securing fuel supplies years in advance.

The common thread across these steps is an effort to make nuclear power more scalable, flexible and, above all, safer than before.

The Canada-India uranium deal fits right into that pattern. So yes, in a sector where mistakes take decades to correct, India is finally planning its energy future before a crisis forces its hand. what do you think

Until next time…

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