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– By Imteyaz Siddiqui, VP, Polywater & Chairman Northern Region, IEEMA
Hon’ble Finance Minister Ms Nirmala Sitharaman presented the Union Budget 2026-27 on 1st February 2026. Anchored in the Viksit Bharat vision, this budget positions the power sector among six strategic focus areas, with provisions aimed at reshaping India’s energy landscape and creating ripples across global markets.
Key Allocations
The budget projects GDP growth above 7% and a fiscal deficit of 4.3% of GDP. Total capital expenditure stands at a record ₹12.2 lakh crore. The Ministry of New and Renewable Energy received an enhanced allocation of approximately ₹330 billion, a 23% increase. PM Surya Ghar rooftop solar scheme received ₹22,000 crore (up 10%), PM-KUSUM for agricultural solar nearly doubled to ₹50 billion, and the Distribution Sector Scheme has been allocated ₹18,000 crore for DISCOM modernisation.
Impact on India’s Power Sector
Renewable Energy: The budget eliminates customs duty on Sodium Antimonate—a key raw material for solar glass—reducing costs for domestic module manufacturers. Enhanced allocations for rooftop solar target free electricity for one crore households.
Energy Storage: Customs duty exemptions have been extended to grid-scale Battery Energy Storage Systems (BESS), with full exemption on lithium-ion battery waste to encourage domestic recycling. These measures will reduce CAPEX for storage projects critical to India’s 500 GW non-fossil capacity target by 2030.
T&D Infrastructure: Strategic restructuring of PFCs and RECs aims to improve credit flows and attract global investment. States implementing distribution reforms receive additional borrowing limits of 0.5% of GSDP, while increased outlay for the Green Energy Corridor ensures seamless renewable power evacuation.
Nuclear & Decarbonization: Under the SHANTI Act, nuclear equipment exemptions remain in place until 2035, with private SMR participation enabled. A landmark ₹20,000 crore CCUS mission targets power, steel, and cement sectors. Dedicated Rare Earth Corridors in four states will support critical mineral sovereignty.
Global Implications
India’s push for critical mineral sovereignty challenges China’s dominance in clean energy supply chains, signalling intent to become a “solutions destination” rather than merely a consumption market. International manufacturers may need local operations to remain competitive.
Policy consistency attracts global investors, while the Infrastructure Risk Guarantee Fund reduces long-term project risks for pension and sovereign wealth funds. The CCUS commitment addresses the EU’s concerns about the Carbon Border Adjustment Mechanism, ensuring that Indian exporters maintain market access in carbon-conscious jurisdictions.
Conclusion
The Budget 2026-27 represents a strategic inflexion point, focusing on manufacturing depth, grid infrastructure, energy storage, and decarbonisation. India’s ambitious targets—500 GW of renewable capacity by 2030, 100 GW of nuclear capacity by 2047, and net-zero by 2070—make it impossible for international players to ignore. Those who engage early will benefit most from India’s emergence as a global clean energy powerhouse.
