Giving a strong push to renewable energy, Finance Minister Nirmala Sitharaman has increased the budget allocation for the sector by Rs 9251 crore. The new allocation of 26549 crore is 53 per cent higher than the previous budget.
The industry welcomed the move for its strong emphasis on clean technology, manufacturing, and infrastructure, which they believe would fuel the country’s push toward energy security and sustainability.
The budget’s provisions, particularly for solar power such as PM Suryaghar Yojana and PM Kusum Scheme, further battery storage, and the Nuclear Energy Mission, are being highlighted by the industry veterans as crucial steps toward realising India’s ambitious energy transition goals
Solar and Wind Energy to Get a Major Boost
Amit Paithankar, Whole-time Director, CEO, Waaree Energies, expressed optimism over the government’s commitment to supporting the cleantech manufacturing sector. “The budget allocation for PM Suryagar Yojana and PM Kusum scheme indicates a strong focus on solar and wind energy, with an ambitious target of 35 lakh houses under the scheme and 8 lakh additional solar pumps,” he said.
According to Paithankar, the announcement of over 21 gigawatts of allocation across various programs in renewable energy is “phenomenal news” for the industry.
Focus on Domestic Manufacturing
Parag Sharma, Founder & CEO, O2 Power, underscored the importance of enhancing India’s domestic manufacturing capacity for solar modules, cells, wind turbines, and batteries. However, he cautioned that a rush to “Make in India” without adequate manufacturing capacity could disrupt the growth of the sector. Sharma emphasised the need to balance policy reforms with market readiness, particularly in battery storage systems, which still face high production costs.
Infrastructure Development: Key to Enabling Energy Transition
Simarpreet Singh, Executive Director & CEO, Hartek Group, emphasised the critical need for robust grid infrastructure to evacuate renewable energy. “The grid-scale electrification focus in the budget is a significant step forward,” he noted. Singh also highlighted the government’s focus on high-voltage electrical equipment manufacturing, which will support the growing renewable energy sector. Despite the positive outlook, Singh pointed to the lack of mention of Right of Way (ROW) reforms, which he believes is a major bottleneck for the industry’s growth.
Strong Focus on Energy Security and Affordability
Girish Kadam, Senior VP & Group Head of Corporate Sector Ratings, ICRA, pointed to the government’s nuclear energy initiative, which aims for 100 gigawatts of nuclear power by 2047. While the ambitious nuclear goal is seen as a step toward energy security, Kadam cautioned that it would face significant execution challenges. He also emphasized the government’s continued focus on clean energy, with a marked increase in funding for rooftop solar, distribution reforms, and manufacturing of critical components for the renewable energy sector.
Transmission Infrastructure and the Role of State Governments
Vaibhav Pratap Sing, Executive Director, Climate and Sustainability Initiative, provided insight into the growing importance of transmission infrastructure, especially as India shifts toward decentralized energy generation. He noted that the budget places responsibility on state governments to improve distribution and transmission systems to support energy transition. Singh also pointed to the significant cost challenges facing electric vehicles (EVs), stressing the importance of solving issues around critical mineral sourcing to bring EVs into price parity with internal combustion engine (ICE) vehicles.
Emphasis on Ease of Doing Business and Manufacturing
Shilpa Urhekar, CEO, Gensol Engineering, highlighted two major themes she believed were central to the budget: manufacturing and the ease of doing business. “The government’s focus on creating an ecosystem that fosters finance and investment is critical for our energy transition,” she said. Shilpa also pointed out the focus on intrastate transmission systems and regulatory frameworks, which could facilitate smoother energy distribution. She expressed hope that the budget’s provisions would lead to enhanced power sector reforms, particularly in streamlining the regulatory process for energy projects.
The industry views the government’s budget as a well-rounded approach to India’s energy transition, balancing the need for infrastructure development, clean energy investments, and manufacturing capacity. The key takeaway: while the budget takes important steps to support the growth of clean energy, challenges around execution, infrastructure, and policy reforms remain areas to watch in the coming years.