Budget 2025-26: A Closer Look at India’s Renewable Energy Ambitions

With a budget of ₹20,000 crores, the PM Surya Ghar Yojana can cater to approximately 20 lakh installations. MNRE, however, targets an additional 30 lakh installations in FY 2025-26 after completing 10 lakh by March 2025. The math doesn’t quite add up—the budget appears on the lower side, raising concerns about how these ambitious goals will be financed.

The Union Budget 2025-26 has brought significant attention to the renewable energy sector, particularly the Ministry of New and Renewable Energy (MNRE). With an increased allocation of ₹26,549.38 crores, the government has made clear its intentions to strengthen India's clean energy initiatives. But, beyond the numbers, what does this budget truly mean for the renewable energy industry?

A Bigger Budget, But Is It Enough?

The total budget for MNRE has seen a considerable increase from ₹17,298.44 crores in 2024-25 to ₹26,549.38 crores in 2025-26. The bulk of this allocation focuses on solar energy, with ₹24,224.36 crores earmarked for various solar initiatives. Key programmes like the PM Surya Ghar Muft Bijli Yojana and the KUSUM Scheme are at the forefront, receiving ₹20,000 crores and ₹2,600 crores respectively.

However, while the numbers suggest a strong push towards solar energy, industry insiders are questioning whether the budget is sufficient to meet the ambitious targets set by MNRE.

Breaking Down the Solar Budget

The PM Surya Ghar Muft Bijli Yojana aims to solarize 1 crore households, providing free electricity up to 300 units per month. But here’s where the numbers raise eyebrows. With a budget of ₹20,000 crores, the programme can cater to approximately 20 lakh installations. MNRE, however, targets an additional 30 lakh installations in FY 2025-26 after completing 10 lakh by March 2025. This brings the total target to 40 lakh installations by March 2026.

The math doesn’t quite add up—the budget appears on the lower side, raising concerns about how these ambitious goals will be financed.

Customs Duty Restructuring: A Misleading Relief?

Another major announcement in the Union Budget 2025 was the restructuring of the Basic Customs Duty (BCD) on solar cells and modules. At first glance, this appeared to be a significant shift:

• Solar Cells:

• Solar Modules:

While these changes might seem beneficial at first glance, the actual financial impact is minimal. The reduction in BCD is largely offset by the introduction of AIDC, leaving the net duty burden almost unchanged. Manufacturers and developers are advised to look beyond headline reductions and assess the real costs.

Beyond Solar: Other Renewable Initiatives

While solar energy dominates the budget, other renewable sectors have not been ignored:

• Wind & Hydro Energy: ₹551 crores, with wind power (grid) receiving ₹500 crores.

• Green Energy Corridor: ₹600 crores allocated to expand transmission infrastructure.

• National Green Hydrogen Mission: ₹600 crores to position India as a global leader in green hydrogen.

• Bio Energy Programme: ₹325 crores, focusing on off-grid bio power and biogas programmes.

These allocations reflect a balanced approach, supporting a diversified renewable energy portfolio. However, like the solar budget, the actual effectiveness will depend on how these funds are utilized and whether they can meet the industry’s growth expectations.

Investments in Public Enterprises

Public enterprises like the Indian Renewable Energy Development Agency (IREDA) and the Solar Energy Corporation of India (SECI) are set to receive ₹34,974.99 crores and ₹485 crores respectively. These investments are critical for driving large-scale renewable projects and ensuring financial stability within the sector.

The Industry’s Verdict: Optimism with Caution

While the MNRE Budget 2025-26 emphasizes renewable energy growth, the industry’s response has been mixed. On one hand, the increased allocations signal the government’s commitment to clean energy. On the other hand, the budget’s limitations—particularly in solar installations and misleading BCD reductions—highlight potential challenges.

The solar industry, in particular, may face funding gaps to meet its ambitious targets, necessitating alternative financing strategies. Manufacturers and developers must remain vigilant, ensuring that they adapt to policy changes and leverage available resources efficiently.

Final Thoughts

The MNRE Budget 2025-26 sets the stage for transformative growth in India’s renewable energy sector. However, as with any ambitious plan, the true test will lie in execution. The industry must navigate both the opportunities and the challenges presented by this budget to drive India’s clean energy future forward.

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