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Abstract: India is facing great challenges in its economic development due to the impact on climate change. Energy is the important driver of economy. At present Indian energy sector is dominated by fossil fuel. Due to international pressure for green house gas reduction in atmosphere there is a need of clean energy supply for energy security and sustainable development. The nuclear energy is a sustainable solution in this context to overcome the environmental problem due to fossil fuel electricity generation. This paper examines the implications of penetration of nuclear energy in Indian power sector. Four scenarios, including base case scenario, have been developed using MARKAL energy modeling software for Indian power sector. The least-cost solution of energy mix has been measured. The result shows that more than 50% of the electricity market will be captured by nuclear energy in the year 2045. This ambitious goal can be expected to be achieved due to Indo-US nuclear deal. The advanced nuclear energy with conservation potential scenario shows that huge amounts of CO2 can be reduced in the year 2045 with respect to the business as usual scenario. [ABSTRACT FROM AUTHOR]