The Union Budget 2026-27 aims at strengthening clean energy development, clean technology manufacturing, lithium-ion battery production, and tariff rationalisation. There has been a significant increase in budgetary allocations for the Ministry of New and Renewable Energy (MNRE) as well. For 2026-27, the MNRE has been allocated Rs 329.14 billion, up from Rs 265.49 billion in 2025-26. The allocation for the solar sector is Rs 305.39 billion in 2026-27, up from Rs 242.24 billion in 2025-26. The allocation for the Pradhan Mantri Krishi Urja Suraksha evam Utthaan Mahabhiyan programme is Rs 50 billion, and that of the PM Surya Ghar: Muft Bijli Yojana is Rs 220 billion in the 2026-27 budget. The allocation for the National Green Hydrogen Mission is Rs 6 billion. The total budgetary allocation for wind and other renewable energy sources (grid and offgrid hydro power) is Rs 5.51 billion, and that for the bioenergy programme is Rs 2.75 billion. In the budget, Rs 5.99 billion has been allocated for green energy corridors.
To reduce input costs, boost domestic manufacturing, and enhance export competitiveness, the basic customs duties have been reduced on several items. In the renewable energy sector, the duty on sodium antimonate used in the manufacture of solar glass has been cut from 7.5 per cent to nil. Additionally, specified capital goods required for the manufacture of lithium-ion cells for battery energy storage systems will now attract nil basic customs duty. Furthermore, the budget has also proposed to exclude the entire value of biogas while calculating the central excise duty payable on biogas-blended compressed natural gas. In the critical mineral space, the basic customs duty on monazite has been reduced from 2.5 per cent to nil.
A scheme for Rare Earth Permanent Magnets was launched in November 2025, with the government now proposing targeted support for mineral-rich states of Odisha, Kerala, Andhra Pradesh, and Tamil Nadu to establish dedicated rare earth corridors. These corridors are aimed at strengthening the entire value chain, including mining, processing, research, and manufacturing, to build domestic capabilities in critical minerals. In addition, aligning with the Carbon Capture Utilisation and Storage (CCUS) roadmap launched in December 2025, the government plans to scale up CCUS technologies to achieve higher readiness levels across five major industrial sectors, namely power, steel, cement, refineries, and chemicals. To support this initiative, an outlay of Rs 200 billion has been proposed over the next five years, signalling a long-term commitment to industrial decarbonisation.
Senior Industry experts share their Budget 2026 reactions for the clean energy sector.
Anu Chaudhary, Partner, Global Head – Sustainability and Climate Consulting, Uniqus
This marks a decisive shift from climate intent to implementation. The scheme aims to scale up CCUS technologies across hard-to-abate sectors including power, steel, cement, refineries, and chemicals — industries that are critical to India’s industrial growth but difficult to decarbonise.
With Rs 5 billion allocated in FY27 as part of the first phase and a PPP-led implementation model, the initiative could anchor India’s broader energy security and decarbonisation strategy across power, fuels, and hydrogen.
Source: Renewable Watch
