The Union Budget 2025-26 presents a range of measures aimed at enhancing India's power and renewable energy landscape. These include sector reforms, nuclear energy development, clean technology manufacturing, tariff reductions, and substantial budgetary increases for relevant ministries.

The government will incentivise electricity distribution reforms, support intra-state transmission expansion, and offer states an additional 0.5% of their GSDP in borrowing, contingent on implementing these reforms. The Revamped Distribution Sector Scheme, with an allocation of Rs 3037.58 billion, targets reducing AT&C losses to 12-15% and eliminating the ACS-ARR gap by 2024-25. Performance-based funding, prepaid smart meters, and special provisions for agricultural electricity supply under the PM-KUSUM scheme will further enhance operational stability.

India aims for 100 GW of nuclear power capacity by 2047. To achieve this, the government will amend the Atomic Energy Act and the Civil Liability for Nuclear Damage Act to allow private sector participation. A Nuclear Energy Mission with Rs 200 billion allocated will support the development of small modular reactors (SMRs), with at least five SMRs expected to be operational by 2033.

The budget emphasises clean technology production, focusing on solar PV cells, EV batteries, motors, electrolysers, wind turbines, and transmission equipment. Full exemptions on customs duty for 25 critical minerals, including cobalt and lithium-ion battery scrap, will support domestic manufacturing.

The government is expanding the list of capital goods eligible for customs exemptions, including 35 items for EV battery manufacturing and 28 for mobile battery production. This will strengthen the clean energy and electric mobility sectors.

To promote affordability in the clean energy space, customs duties on solar cells have been reduced from 25% to 20%, and duties on smart meters have been similarly lowered, enhancing competitiveness and supporting widespread adoption.

For 2025-26, the Ministry of Power has received Rs 218.47 billion (up from Rs 205.02 billion in 2024-25), while the Ministry of New and Renewable Energy has seen an increase to Rs 265.49 billion (from Rs 191 billion). These enhanced allocations signal a continued focus on energy transition and sustainability.

Vinay Thadani, Director & CEO GREW Solar, commented, “The budget for 2025-2026 presented by the Finance Minister is a testament to the Government's commitment to move towards renewable energy for Viksit Bharat by 2047.The idea of a new manufacturing mission under the ‘Make in India’ initiative will support small, medium, and large industries through comprehensive policy backing and a detailed framework. The mission aims to create an ecosystem for solar PV cells, electrolysers, and grid-scale batteries. This will help expedite the development of the renewable energy sector, which will help in employment generation, reduce the cost of the panels, and focus on research and development.”

Thadani added, “We are also extremely grateful to FM for simplifying income tax and putting additional money in the hands of the middle class. This will boost the consumption and wheels of the economy.”

 

Girish Tanti, Vice Chairman, Suzlon, said “The Government budget seems to be a significant step towards achieving India's ambitious energy goals. By strengthening Aatmanirbhar Bharat across manufacturing and agriculture, with a focus on clean tech, wind, solar, EV, and battery storage, the budget aims to accelerate self-reliance in wind and solar manufacturing. The National Manufacturing Mission's targeted support for all renewable energy sources is a welcome move, as it reinforces India's commitment to a level playing field and ambitious energy goals. The expected outcomes are promising: surpassing the 500 GW target and creating nearly 3 million green jobs. Additionally, incentives for electricity distribution reforms and intra-state transmission upgrades will likely improve the financial health of power companies and enable better grid integration of renewables. This comprehensive approach should have a positive impact on India's economy and population.”

 

Tanti further mentioned, “The key word is Eco-System: the nation cannot rely on just individual solutions to achieve its green transition at lowest cost to customers.  It requires a judicious mix of wind, solar, batteries and other non-fossil technologies, together with distribution reforms.  And for national security, we need to build this expertise locally, requiring the build-out of all these industries at scale.  We are happy that this budget recognises this need.  Suzlon is keen to work with the government and together with our fellow industrial groups to realise this vision.”

Jitendra Mamtora, Managing Director at Transformers & Rectifiers India Limited, commented, “Budget is in line with the governments’ aspirations towards the developed India by 2047, capax provision of 11.2 trillion for next year is in positive direction, it could have been increase but is this is also a significant capex for the country. Reform Initiatives by the government in the Power Sector, 100 GW initiatives for nuclear power, infra and other sector reforms are very good for the capital goods sector. Governance initiatives in this budget are very critical for the economy and road towards developed India. Increase of personal tax limits to Rs 1.2 million covers almost 85% tax payers of the country which will lead to overall growth. Overall, this is a good budget for future directions and growth oriented.”

Sachin Kotak, Partner, Bain & Company, remarked, "Budget focuses on continuing and amplifying the impact of its earlier energy sector initiatives from the last interim budget. It anchors energy sector provisions around boosting manufacturing, furthering make in India and driving power sector reforms. The budget has focused on 3 key interventions. One, it promotes manufacturing of renewable energy components especially lithium-ion batteries in India through (a) extending critical minerals list for BCD waiver (b) extending list of exempted capital goods and (c) strengthening the policy support under National Manufacturing Mission. Two, the budget aims to boost Nuclear Energy India by (a) targeting to build 100 GW of nuclear energy by 2047 (b) allocating Rs 200 billion for building 5 SMRs by 2033 (c) proposing to amend Atomic Energy Act and Civil Liability for Nuclear Energy Act to promote private participation.”

Kotak also stated, “Lastly, the budget aims to improve the health of the state discoms and thereby overall power sector in the country by incentivising states with an additional 0.5% of GSDP borrowing allowance linked to undertaking distribution and interstate transmission reforms. Overall, the budget has taken a very action oriented, pragmatic and measurable impact lens to energy sector reforms, which is very welcoming. It will definitely continue to boost the domestic manufacturing push for all renewable energy components that government has been systematically driving over last few years and also set-up a platform for the Electricity Amendment Bill that has been under discussion for some time."

Heena Khushalani, Partner - Climate Change and Sustainability Services, EY India, said, “The 2025 budget announcement is certainly aimed at integrating the government's green agenda alongside India's robust growth. The clear focus to support cleantech manufacturing incl. support to lithium-ion batteries is a welcome move to reduce our dependency on exports. The National Nuclear Mission outlay of 200 billion, alongside private sector participation will certainly bolster India's energy transition.  The budget also has a good focus on boosting climate resilience and agricultural productivity, fisheries and these are all measures required to support the sustainable growth of rural India. While the budget does show the government's commitment towards sustainable growth, an enhanced focus on adaptation financing and climate finance taxonomy is required/have been amiss to boost sustainable finance would be necessary.”

 

 

Raju Kumar, Partner and Energy Tax Leader, EY India, stated, “The Budget reinforces India’s energy transition by prioritising domestic clean-tech manufacturing, power sector reforms, and electric mobility. The National Manufacturing Mission for clean tech is a crucial step in reducing import dependence for solar PV cells, wind turbines, and battery storage, supporting India’s goal of energy self-sufficiency. Lower customs duties on solar modules, lithium-ion battery waste, and critical minerals will enhance cost competitiveness and encourage local manufacturing. The Nuclear Energy Mission, targeting 100 GW by 2047, is a game-changer, as nuclear can provide round-the-clock clean power. However, the success of private sector participation, facilitated by proposed amendments to the Atomic Energy Act, will depend on clear regulatory frameworks and risk-sharing mechanisms. The investment in Small Modular Reactors (SMRs) with an outlay of Rs 200 billion is a forward-looking step, with the potential to enhance energy security.”

 

Kumar also mentioned, “For the power sector, linking borrowings to state GSDP is a strategic move with plans to incentivise electricity distribution reforms and augmentation of intra-state transmission capacity by states.  The Budget also supports EV adoption, with duty exemptions on EV battery manufacturing equipment and reductions in import duties on EV components and commercial transport vehicles, which will accelerate the shift to sustainable mobility. The energy sector now has clear policy direction powered by fiscal incentives; execution and private sector participation will define its success.”

 

Jayadev Galla, CMD, Amara Raja Energy & Mobility Limited (ARE&M), noted, “The government’s emphasis on clean-tech manufacturing—including solar PV cells, electric vehicle (EV) batteries, and wind turbines—underscores its unwavering commitment to the 'Make in India' vision. While the National Manufacturing Mission represents a crucial step in strengthening domestic manufacturing capabilities, targeted incentives for lithium-ion battery production, along with R&D support for emerging sectors in the energy transition—such as electronics and EV components for solar energy—will help India accelerate its efforts toward realising the 'Make in India' initiative. Investment in skill development and education is key to equipping India’s youth with the essential capabilities to thrive in an increasingly technology-driven world. The government’s focus on healthcare, particularly initiatives aimed at improving nutritional support and expanding medical education, will play a vital role in enhancing the nation’s overall well-being. Additionally, the establishment of daycare cancer centres and the provision of social security for gig workers highlight the government’s dedication to ensuring that all citizens have access to quality healthcare and robust social protection.”

 

Galla further stated, “While the budget aligns with the Economic Survey and industry representations, covering several macro-level announcements—such as the new income tax structure, easing of TDS and TCS processes, the Nuclear Energy Mission targeting 100 GW by 2047, and the proposed Rs 1.5 trillion allocation for 50-year interest-free loans to states for capital expenditure and incentives for reforms—there remains a lack of clarity regarding the new labour codes and the Rs 1 trillion corpus announced in the previous budget to support financing research in technology. Overall, it was a well-balanced budget aimed at accelerating growth while supporting the middle class and vulnerable sections of society.”

Somesh Kumar, Partner & Leader - Power & Utilities, EY India, said, “The Union Budget 2025 lays a strong foundation for India’s power sector, driving domestic manufacturing, energy security, and financial reforms. The new Make in India manufacturing mission will strengthen the domestic value chain for solar PV, EV batteries, electrolysis, wind turbines, and high-voltage transmission equipment, reducing import dependence and enhancing global competitiveness. Power sector reforms will incentivise electricity distribution improvements and intrastate transmission capacity augmentation, improving the financial health of DISCOMs. States implementing these reforms will benefit from an additional 0.5% of GSDP borrowing capacity, ensuring better infrastructure and efficiency.”

 

Kumar also remarked, “The 100GW Nuclear Energy Mission by 2047 is a landmark initiative, fostering private sector participation and R&D in modular reactors to deploy 20 modular nuclear plants by 2033. Amendments to the Atomic Energy Act and a Rs 200 billion investment will drive its execution.

 

Additionally, custom duty exemptions on critical minerals like cobalt, lithium-ion battery waste, lead, zinc, and 12 more minerals, along with 35 new capital goods for EV battery manufacturing and 29 additional goods for mobile phone battery production, will boost domestic manufacturing and investment in energy storage solutions.”