Union Budget 2025-26: Solar shines bright with massive allocation of Rs 20,000 crore

The solar power sector has seen an increase in allocation in Union Budget 2025-26 as the government plans to focus big on the rooftop solar scheme PM Surya Ghar Muft Bijli Yojana with an allocation of Rs 20,000 crore compared to Rs 6,500 in FY25. 

There has been a growing push for the renewable energy with the country’s target to have 500GW of non-fossil fuel power by 2030. It currently stands at 209 GW.  

Finance Minister announced a Manufacturing Mission and it will also support Clean Tech manufacturing.

“This will aim to improve domestic value addition and build our ecosystem for solar PV cells, EV batteries, motors and controllers, electrolyzers, wind turbines, very high voltage transmission equipment and grid scale batteries,” she said. 

This comes as the Economic Survey FY25 also pointed at the dependence on China for material for renewable manufacturing. 

Varchasvi Gagal, MD & CEO of Datta Power Infra, said the move is a strategic step towards creating a robust manufacturing ecosystem in India, supported by the Production-Linked Incentive (PLI) scheme.

“Firstly, it will enhance India’s self-reliance in solar cell production, aligning with the government’s vision of Atmanirbhar Bharat. Secondly, it will significantly accelerate the country’s progress towards achieving its ambitious 500-gigawatt renewable energy target by 2030. By promoting in-house module assembly and cell manufacturing, India can reduce its dependence on imports and develop a sustainable renewable energy ecosystem,” he said.

To further support local production, basic customs duties have been removed on cobalt powder, lithium-ion battery scrap, lead, zinc, and 12 additional critical minerals—a follow-up to the July 2024 policy that exempted 25 key minerals from import duties. This measure is expected to lower input costs, secure raw material supply chains, and promote job creation in renewable energy.

“The union budget has rightfully focussed on doubling down on making domestic manufacturing and exports competitive, which would create new jobs, economic growth, and a stable energy transition. Currently, for many clean energy equipment manufacturers, it is increasingly becoming difficult to compete with Chinese giants on artificial selling costs and overcapacities,” Rishbah Jain, Senior Programme Lead, Council for Energy Environment & Water.