Budget 2026–27 Lays Strong Structural Foundation for India’s Power Sector Transformation

Budget 2026–27 provides a clear and confident push to India’s clean‑energy transition. The targeted support for solar manufacturing, battery storage, critical minerals, CCUS, and clean power infrastructure strengthens the entire renewable energy value chain. These measures will accelerate deployment, reduce system costs, and enhance energy security—creating a strong foundation for India’s green hydrogen ambitions and a resilient, future‑ready power sector. - Ajay Mishra, Director General, RESI

The Union Budget 2026–27 delivers a comprehensive set of structural reforms that strengthen India’s entire power sector—from renewable energy generation and storage to transmission, industrial decarbonisation, and clean‑energy manufacturing. While the Budget does not announce new flagship schemes for individual technologies, it provides a deep ecosystem push that supports solar, wind, hydro, bioenergy, green hydrogen, and grid infrastructure, aligning with India’s long‑term goals of achieving 500 GW of non‑fossil capacity by 2030 and net‑zero emissions by 2070.

A major highlight is the launch of a ₹20,000‑crore Carbon Capture, Utilisation and Storage (CCUS) scheme, which directly supports decarbonisation in hard‑to‑abate sectors such as steel, cement, chemicals, and refineries. These industries form the core early‑stage demand for green hydrogen, making CCUS a critical enabler for scaling hydrogen adoption and creating commercially viable low‑carbon industrial ecosystems. The scheme also strengthens India’s competitiveness in hydrogen‑based industrial exports and supports the broader National Green Hydrogen Mission.

Solar Energy Receives a Strong Manufacturing and Cost‑Reduction Boost

The Budget provides a significant push to the solar sector through targeted customs duty exemptions that reduce the cost of domestic manufacturing and improve supply‑chain resilience. The exemption of Basic Customs Duty (BCD) on sodium antimonate, a key input for solar glass manufacturing, directly lowers module production costs and supports India’s ambition to build an integrated solar manufacturing ecosystem.

Additionally, the exemption of BCD on capital goods used for processing critical minerals strengthens upstream supply chains for solar cells, wafers, and power electronics. The extension of duty exemptions for capital goods used in lithium‑ion cell manufacturing further supports the growth of battery energy storage systems (BESS)—a critical requirement for round‑the‑clock solar power and grid stability. These measures collectively reduce the landed cost of solar components, improve domestic value addition, and support India’s rapid solar deployment trajectory.

Wind, Hydro and Bioenergy Strengthened Through Broader Clean‑Energy Measures

Although the Budget does not introduce new wind‑ or hydro‑specific schemes, the broader clean‑energy reforms strengthen the ecosystem for both sectors. Duty exemptions for critical minerals, power electronics, and battery storage components reduce the cost of hybrid renewable projects that combine wind, solar, and storage.

Bioenergy receives a direct boost through the removal of excise duty on the biogas component of biogas‑blended CNG, strengthening the biofuels ecosystem and supporting India’s waste‑to‑energy and compressed biogas (CBG) initiatives.

Hydropower benefits indirectly from the extension of duty exemptions for nuclear power project imports till 2035, which enhances India’s clean baseload capacity and supports grid balancing as renewable penetration increases. This diversified clean‑energy mix is essential for integrating large volumes of variable solar and wind power.

Transmission, Grid Modernisation and Industrial Infrastructure Receive a Major Upgrade

The Budget’s infrastructure push significantly strengthens the backbone required for renewable energy expansion. The development of Dedicated Freight Corridors, 20 new National Waterways, and the ₹2 lakh crore SASCI support to states enhances logistics for renewable energy equipment, hydrogen derivatives, and large‑scale clean‑energy projects.

The focus on developing Tier II and Tier III cities as economic regions opens new opportunities for renewable manufacturing clusters, transmission hubs, and distributed energy systems. The creation of an Infrastructure Risk Guarantee Fund improves financing conditions for large‑scale renewable and transmission projects, reducing risk premiums and enabling faster deployment.

Energy Security Measures Reinforce Long‑Term Stability

The Budget strengthens India’s long‑term energy security through measures that diversify clean power sources and reduce import dependency. The extension of duty exemptions for nuclear power project imports till 2035 ensures stable, clean baseload power that complements variable renewable energy.

Duty exemptions for critical mineral processing and lithium‑ion cell manufacturing support domestic production of batteries, power electronics, and renewable energy components, reducing reliance on global supply chains and improving resilience.

Manufacturing and Critical Minerals Strategy Strengthens Clean‑Energy Supply Chains

The Budget’s manufacturing thrust—through India Semiconductor Mission 2.0, the Electronics Components Manufacturing Scheme, and incentives for critical mineral processing—supports the domestic production of solar inverters, wind turbine electronics, battery systems, and electrolyser components. These reforms reduce import dependency and strengthen India’s position in global clean‑energy supply chains.

A System‑Strengthening Budget for India’s Power Sector

Budget 2026–27 delivers a deep, structural, ecosystem‑building push for India’s power sector. By lowering renewable energy costs, improving energy security, enabling industrial decarbonisation, strengthening transmission and logistics, and supporting domestic manufacturing, the Budget positions India to accelerate solar and wind deployment, expand bioenergy and hydro capacity, and scale green hydrogen production.

It is a Budget that strengthens the entire clean‑energy value chain, laying the groundwork for India’s emergence as a global leader in renewable power and green industrial growth.

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