Overview
The renewable energy sector anticipates that Finance Minister Nirmala Sitharaman would announce more steps to encourage the production of local equipment, policies to encourage the adoption of green technologies, increased funding for renewables, and a duty differential to assist domestic companies.

Over the past two years, the fiscal support for the renewable energy sector has more than doubled. Compared to the revised budget estimate of ₹7,848 crore for FY 2023-24, the Ministry of New and Renewable Energy’s (MNRE) total allocation for FY 2024-25 climbed to ₹19,100 crore.

As India strives to reach 500 GW of green energy capacity by 2030, the Union Budget 2025–26, which will be unveiled on February 1, is anticipated to include a number of incentives for the renewable energy industry. The renewable energy sector in India is optimistic that the next Union Budget will provide a path for the fossil fuel-dependent economy to increase its green energy capacity in multiple ways, given recent geopolitical developments such as China’s export restrictions and the United States’ tougher sanctions on Russian oil.

Large budget allocation through PLI Schemes
Green energy stakeholders want a stronger domestic push, whether it is for output, storage capacity, new production-linked incentive (PLI) schemes with larger budget allocations for areas like battery infrastructure, or research and development promotion. This is especially important at a time when India may find it difficult to meet its 2030 target of 500 GW from non-fossil fuel sources.

According to Subburathinam P, Chief Operating Officer of TeamLease Services, many businesses in these industries are still in the pre-production or incubation stage. It is crucial that they enter the production stage in order to benefit from PLIs in the renewable energy industry. The industry anticipates a drive toward battery storage, which is essential for integrating renewable energy and guaranteeing a steady power supply.

Industry participants look for ways to solve implementation issues and encourage domestic production in new and developing renewable technology areas. To reduce reliance on imports, primarily from China, the government may propose support measures for the domestic battery manufacturing and supply chain.

PSUs in action
In order to meet the 2030 target and become Net Zero by 2070, more steps are anticipated to increase the involvement of corporate and public sector undertakings (PSUs) in the green energy transition. Given that these technologies have large capital expenditures and a ten to fifteen-year time horizon, a significant rise in resource allocation is anticipated for the adoption of renewable energy, the integration of green technologies, and waste reduction.

Solar Cells to be supported by incentives
Observers of the green energy sector believe that more incentives to support domestic production of solar cells and green hydrogen would be included in the Union Budget 2025. In order to increase research and development (R&D) activities in the industry and draw in foreign money, supporting measures can be proposed.

As the nation seeks to diversify its renewable energy portfolio, larger solar and offshore wind projects are probably going to receive larger budgetary allocations. In a similar vein, increased funding is anticipated for carbon markets, green hydrogen production, and future technologies.

Support for minerals
The government may focus on critical minerals such as lithium, copper, cobalt, and rare earth materials, which are vital for sectors like nuclear energy, renewable energy, space, defence, telecommunications, and high-tech electronics.

In the last budget, the government fully exempted customs duties on 25 critical minerals and reduced basic customs duties (BCD) on two of them to boost the processing and refining of such minerals. Any further friendly measures in this direction will ensure the easy availability of such critical minerals for renewable energy players.

Boosting the Green Sector
In order to encourage the public to embrace green energy, the government introduced legislative initiatives like the PM Surya Ghar Muft Bijli Yojana in the most recent Budget. In order to provide free electricity to one crore families, up to 300 units per month, the Yojana was started to install rooftop solar plants.

Last year, the increase of energy capacity in the renewable energy industry significantly improved. In the calendar year 2024, 27 GW of renewable energy capacity was added. In November 2024, the total installed non-fossil fuel capacity was 214 GW, a 14% increase over the 187.05 GW recorded during the same period the previous year. Of this, 47.96 GW came from wind energy and 94.17 GW from solar energy.

Ahead of the Union Budget 2025, pressure has continued to mount on leading renewable energy equities. Compared to their closing price on the NSE on January 1, the shares of major industry companies, including Waaree Energies, KPI Green Energy, NTPC Green, and Adani Green Energy, have dropped by as much as 60% since the start of the month.