Budget Allocates INR 22,000 Cr for PM Surya Ghar, INR 1,000 Cr for BESS VGF, INR 500 Cr for CCUS
Union Budget 2026–27 reinforces India’s clean energy push with an INR 22,000 crore outlay for PM Surya Ghar, INR 5,000 crore for PM-KUSUM, INR 1,000 crore for VGF fund for BESS, INR 500 crore for CCUS and sustained support for hydrogen, grids, and manufacturing-led decarbonisation.
February 02, 2026. By Mrinmoy Dey
Allocation for the flagship PM Surya Ghar Muft Bijli Yojana has increased from INR 20,000 crore in 2025–26 to INR 22,000 crore in 2026–27, highlighting the government’s priority on residential solar. Launched by Prime Minister Narendra Modi in February 2024, the PM Surya Ghar Yojana aims to provide free electricity by enabling rooftop solar installations for one crore households.
As of December 3, 2025, a total of 23,96,497 households have installed rooftop solar systems under the PM Surya Ghar Muft Bijli Yojana, which is around 23.96 percent of the targeted one crore households by March 2027.
PM-KUSUM Yojana has also seen sustained support, rising from INR 2,560 crore in 2024–25 to INR 5,000 crore in both 2025–26 (RE) and 2026–27 (BE), reinforcing the focus on solar-powered agriculture.
Spending on solar power continues to dominate the renewable mix, with overall solar allocations increasing from INR 17,107.07 crore in 2024–25 to INR 24,224.36 crore in 2025–26 (BE), revised to INR 23,124.36 crore, and further scaled up to INR 30,539.36 crore in 2026–27 (BE). Within this, on-grid solar allocations, after declining from INR 6,584 crore in 2024–25 to INR 1,000 crore in 2025–26 (RE), have been raised to INR 1,775 crore in 2026–27.
Wind and hydro power allocations have remained largely stable, with wind steady at INR 500 crore and hydro at INR 51 crore in recent years.
Grid and transmission infrastructure continues to receive steady backing, with the Green Energy Corridor allocation rising from INR 346.07 crore in 2024–25 to INR 600 crore in 2025–26 (BE), revised to INR 800 crore, and set at INR 599.99 crore in 2026–27.
The allocation under the National Green Hydrogen Mission has been maintained at INR 600 crore, the same as the last Budget, despite revised estimates of INR 300 crore in 2025-26.
Bio-energy funding has also expanded from INR 160.12 crore in 2024–25 to INR 275 crore in 2026–27, supporting diversification of the renewable portfolio.
System strengthening and storage have gained prominence, with the Power System Development Fund remaining stable at around INR 1,100 crore across years. Viability Gap Funding for BESS has been scaled up significantly, rising from INR 200 crore in 2025–26 to INR 1,000 crore in 2026–27 (BE), underlining the growing emphasis on energy storage.
The ADEETIE Scheme has been provided INR 50 crore in 2026–27, while a fresh allocation of INR 500 crore has been introduced for the Carbon Capture, Utilisation and Storage Scheme, signalling deeper decarbonisation intent.
Clean mobility and manufacturing-linked incentives continue to receive targeted support. The PM E-DRIVE Scheme allocation increased from INR 993.05 crore in 2024–25 to INR 4,000 crore in 2025–26 (BE), revised to INR 1,300 crore, and set at INR 1,500 crore in 2026–27.
Meanwhile, PLI for ACC Battery Storage rose from INR 12.28 crore in 2024–25 to INR 155.76 crore in 2025–26 (BE), before moderating to INR 86.01 crore in 2026–27.
Union Budget 2026–27 signals a strong commitment to infrastructure-led and technology-driven growth, led by a record capital expenditure of INR 12.2 lakh crore to strengthen energy, transport, urban development, and logistics networks. It places a major emphasis on domestic manufacturing through an INR 40,000 crore allocation for India Semiconductor Mission 2.0 and electronics components, alongside robust support for Make in India in solar, batteries, power electronics, electric vehicles, and advanced manufacturing.
The Budget significantly strengthens the energy storage and battery ecosystem by providing customs duty exemptions on lithium-ion cells, BESS capital goods, and battery equipment, while formally recognising storage as core grid infrastructure to enable round-the-clock renewable power.
A key climate and industrial reform is the allocation of INR 20,000 crore for carbon capture, utilisation, and storage (CCUS) over five years, aimed at helping steel, cement, chemicals, power, and refining sectors reduce emissions without compromising competitiveness.
To secure supply chains, the Budget introduces dedicated rare earth corridors in Odisha, Andhra Pradesh, Tamil Nadu, and Kerala, supported by duty relief and incentives for mineral processing, recycling, and domestic sourcing of lithium, nickel, and rare earth magnets.
Renewable energy expansion remains central, with continued backing for PM Surya Ghar, PM-KUSUM, and solar parks, along with BCD exemptions on solar glass, panels, and key inputs, and strong support for rooftop, utility-scale, and decentralised solar deployment.
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