Small Modular Reactors (SMRs) are nuclear reactors designed with smaller power output and modular construction for use where large conventional plants are difficult to establish. India has connected SMR development with remote power supply, strategic infrastructure and long-term energy planning, viewing modular reactors as a way to deploy nuclear capacity incrementally. The modular nature is presented as easing construction, allowing factory fabrication and staged installation nearer to demand centres.

The Andaman and Nicobar Islands currently operate no conventional power stations and rely predominantly on diesel generator sets that use fuel shipped from the Indian mainland. Earlier proposals for an offshore LNG re-gasification facility and for geothermal projects have not reached operational viability, leaving the archipelago dependent on transported fuel and constrained by high logistics costs. Introducing modular nuclear units is framed as a potential alternative to reduce diesel dependence, enhance energy security and lower operating fuel logistics over time.

The proposed nuclear initiative is being discussed in connection with the electricity needs of the Great Nicobar Project, which envisages a greenfield international airport and an International Container Transhipment Terminal at Galathea Bay. The islands' proximity to the Strait of Malacca, a key maritime corridor in the Indian Ocean region, is cited in strategic assessments as increasing the importance of resilient local power for infrastructure and maritime services. Modular solutions are noted for their suitability to remote sites and phased capacity additions.

In policy terms the Finance Minister delivered a Union Budget speech on 23 July 2024 that signalled a shift toward involving private sector partners and international collaborators in SMR development, with Russia named among potential co-operation partners. The Bhabha Atomic Research Centre (BARC) remains the principal nuclear research institution under the Department of Atomic Energy, while the Lieutenant Governor also serves as Vice-Chairman of the Islands Development Agency that coordinates development planning for the archipelago.