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Introduction

On 1 February 2026, Finance Minister Nirmala Sitharaman presented the Union Budget for FY 2026–27. She reaffirmed the government’s commitment to infrastructure-led growth, technology adoption, and domestic manufacturing, all while maintaining fiscal prudence as its primary focus. Anchored in the Viksit Bharat vision, the Budget avoids dramatic tax overhauls and instead prioritizes long-term nation-building.

In this blog, we provide a factual summary of key announcements across power, renewables, grid infrastructure, storage, nuclear energy, and emerging clean technologies, as well as policy measures relevant to businesses throughout the energy value chain.

Macroeconomic and fiscal framework

The Budget aims to strike a fine balance between growth and fiscal discipline.

 

  • It projects India’s GDP growth to remain above 7% in FY 2026–27
  • The fiscal deficit for the year is targeted at approximately 4.3% of GDP, reflecting a continued path towards fiscal consolidation
  • Total capital expenditure for the year has been allocated at around ₹12.2 lakh crore
  • Strategic focus areas include infrastructure, clean energy, domestic manufacturing, semiconductors, artificial intelligence, and digital public infrastructure

Strengthened focus on renewable energy and solar energy

Renewable energy continues to remain a core component of India’s energy planning. The Budget increases allocations for renewable energy programmes, reinforcing the government’s commitment to clean power expansion.

 

  • PM Surya Ghar (Rooftop Solar): A massive sum of ₹22,000 crore allocated to accelerate household solar adoption. This is an increase from ₹20,000 crore in the budget estimates of the previous year, marking an increase of 10 percent
  • Solar Manufacturing: To lower costs for domestic module makers, Basic Customs Duty (BCD) on Sodium Antimonate (a key raw material for solar glass) has been eliminated (7.5% to Nil)
  • Agri-Solar (PM-KUSUM): The outlay for the PM KUSUM program has gone up from ₹26 billion last year to ₹50 billion in this year's Budget 2026

Solving for the supply chain with the battery & EV revolution

The focus of this year's Budget has shifted to deep manufacturing, hence moving from assembly to cell production and mineral security.

 

  • Critical mineral sovereignty: Establishment of Dedicated Rare Earth Corridors in Odisha, Andhra Pradesh, Tamil Nadu, and Kerala to support the full value chain, right from mining to the manufacturing of Permanent Magnets (crucial for EV motors and wind turbines)
  • Tax relief for storage: BCD exemptions previously available for EV battery manufacturing have been extended to Battery Energy Storage Systems (BESS). This will significantly reduce the CAPEX for grid-scale storage projects
  • Circular economy: Full customs duty exemption on Lithium-Ion battery waste and scrap to encourage domestic recycling and secondary material recovery

Bolstering the grid with Transmission & Distribution (T&D)

 

Realizing that green power is only as good as the grid that carries it, the Budget addresses T&D bottlenecks.

 

  • Distribution sector reforms and DISCOM modernisation: The Union Budget 2026 increases the allocation for the Revamped Distribution Sector Scheme (RDSS) to ₹18,000 crore, higher than earlier estimates. The enhanced funding supports ongoing power sector reforms, including reduction of AT&C losses, smart metering deployment, and measures to improve the financial stability of distribution companies (DISCOMs), strengthening operational efficiency and network modernisation.
  • Financial restructuring: A strategic proposal to restructure PFC (Power Finance Corporation) and REC to improve credit flow for modernizing transmission and distribution infrastructure has been set
  • Grid stability: Incentives for states to implement Distribution Reforms, with additional borrowing limits (0.5% of GSDP) linked to performance in reducing AT&C losses
  • Green energy corridors: Increased outlay for intra-state and inter-state transmission projects to ensure seamless evacuation of renewable power from high-potential zones
  • While conventional power does not see major policy shifts in this Budget, continued investment in transmission, distribution, and system efficiency underscores the importance of maintaining reliability and stability across the power sector

Acknowledging decarbonization & frontier tech


For the first time, hard-to-abate sectors have a clear fiscal roadmap for emissions reduction.

 

  • CCUS mission: A landmark ₹20,000 crore incentive scheme for Carbon Capture, Utilization, and Storage (CCUS). This targets the power, steel, cement, and refinery sectors
  • Nuclear Energy (The SHANTI Act): To provide clean baseload power, the budget extends customs duty exemptions on nuclear equipment until 2035 and opens the door for private sector participation in small modular reactors (SMRs)
  • Green Hydrogen & Biogas: Continued funding for the National Green Hydrogen Mission and a full excise duty exemption on the biogas component of biogas-blended CNG

At a glance

For business stakeholders, the Union Budget 2026–27 presents a picture of policy continuity and targeted reinforcement:

 

  • Increased allocations for renewable energy and rooftop solar
  • Formal budgetary support for CCUS and decarbonization technologies
  • Continued focus on energy storage, grid infrastructure, and transmission
  • Customs duty relief supporting domestic manufacturing across clean energy value chains
  • Ongoing recognition of nuclear energy and energy security priorities

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Bottomline

The 2026-27 Union Budget definitely does something enduring. It focuses on the invisible parts of the ecosystem and strengthens them as the building blocks of India’s future economy. This move most certainly reinforces a shift to cleaner, smarter, and more resilient energy systems, with policy tailwinds helping unlock efficiencies and sustainable growth over time.