India’s Union Budget 2025 focuses on long-term energy security and promoting domestic manufacturing as part of the country’s goal to achieve net-zero emissions by 2070. The government aims to strengthen the economy while ensuring a clean and sustainable future. To achieve this, India has been pushing for an expansion of renewable energy, increasing solar and wind capacity, investing in energy storage, and promoting the use of electric vehicles. The government has also been taking steps to decarbonize heavy industries and develop Indian carbon markets over the last two years.
The country remains committed to achieving 500 GW of non-fossil fuel capacity by 2030. Policies continue to support domestic manufacturing of solar modules, batteries, electrolyzers, and wind turbines. In addition, efforts are being made to enhance grid infrastructure and secure critical mineral supply chains. India is also set to reach a milestone in solar energy, as installed solar capacity is expected to cross the 100 GW mark soon. By December 2024, India’s total installed non-fossil fuel-based capacity stood at 225.8 GW, including 97.9 GW from solar, 48.2 GW from wind, 46.9 GW from hydro, and 8.2 GW from nuclear energy.
The Union Budget 2025 continues to support India’s clean energy transition and builds on the trends set by previous budgets. In the Union Budget 2022, the government allocated INR 19,500 crore to boost domestic solar equipment manufacturing, targeting up to 45 GW of capacity. The production-linked incentive (PLI) scheme supported high-efficiency solar PV module manufacturing, resulting in an installed solar module manufacturing capacity of 63 GW and a solar cell manufacturing capacity of 5.8 GW by December 2024.
Union Budget 2023 focused on battery energy storage by announcing viability gap funding (VGF) for 4 GWh of battery energy storage systems (BESS). This was followed by tenders that encouraged competitive pricing, leading to cost reductions in energy storage. Additionally, INR 19,744 crore was allocated to the National Green Hydrogen Mission to make India a global hub for green hydrogen production. Strategic schemes for electrolyzer manufacturing and green hydrogen production were launched, and tenders have been awarded for 412,000 metric tons of green hydrogen production and 1.5 GW of electrolyzer manufacturing capacity.
Union Budget 2024 took steps to diversify non-fossil fuel capacity beyond traditional grid-scale solar and onshore wind projects. The government announced financial support for developing offshore wind energy, offering VGF for the first 1 GW of offshore wind projects. Following this, a 500 MW offshore wind project was tendered along the Gujarat coastline. The budget also supported distributed renewable energy through the PM Surya Ghar Muft Bijli Yojana, a solar rooftop subsidy scheme that contributed to the growth of rooftop solar to 15.7 GW by December 2024. Additionally, a 100% exemption on basic customs duty (BCD) was granted for 25 critical minerals, followed by the approval of the National Critical Mineral Mission in January 2025, with an outlay of INR 34,300 crore over seven years.
The Union Budget 2025 continues these efforts, focusing on long-term energy security. One of the key announcements is the plan to expand nuclear capacity to 100 GW by 2047. The budget also emphasizes domestic manufacturing of solar PV cells, wind turbines, batteries, and electrolyzers.
A National Manufacturing Mission has been launched to strengthen the ‘Make in India’ vision, with an allocation of INR 100 crore for 2025-26. This mission will boost domestic production of clean technology components, supporting India’s self-reliance in renewable energy manufacturing.
The budget also includes measures to strengthen the recycling industry. The exemption of BCD on cobalt powder, lithium-ion battery scrap, and other critical minerals aims to lower costs for domestic producers and encourage investments in recycling. The budgetary allocation for the National Critical Mineral Mission in 2025-26 is INR 410 crore.
The expansion of nuclear energy is another major focus area. The government has set a target of reaching 100 GW of nuclear capacity by 2047 to reduce dependence on fossil fuels and provide stable baseload power. However, this goal will require significant legislative changes, including amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act to enable private sector participation. The budget has allocated INR 2,086 crore for nuclear power projects in 2025-26.
Currently, India’s installed nuclear capacity stands at 8.2 GW, contributing around 2.6% of the country’s electricity generation. The government has announced plans to operationalize five indigenously developed small modular reactors (SMRs) called Bharat SMRs by 2033. These reactors, with capacities ranging from 30 MW to over 300 MW, offer a flexible and scalable alternative to traditional large nuclear reactors. The Nuclear Power Corporation of India Limited (NPCIL) will be responsible for project execution, while the Bhabha Atomic Research Centre (BARC) will focus on research and development.
Despite the budget’s long-term focus, certain short-term priorities were not addressed. There was no explicit mention of continued support for wind energy, transmission infrastructure, energy storage, green hydrogen, or industrial decarbonization. These areas will require additional policy measures to ensure India’s energy transition remains on track.
Overall, the Union Budget 2025 reinforces India’s commitment to a clean energy future. By supporting domestic manufacturing, expanding renewable energy capacity, and strengthening the nuclear sector, the government is laying the foundation for long-term energy security and sustainability.
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