India targets 500 GW of renewable energy capacity by 2030, all eyes are on the upcoming Budget 2026. The government’s next steps to boost renewable energy adoption across sectors will be closely watched by industry and investors. Promoting renewable energy integration is also critical for the success of the ‘Make in India’ programme. While several policy measures are already in place, infrastructure gaps and cost pressures remain.
Here is a look at the current scenario, key challenges and what analysts expect from the Budget this year.
Current Scenario and challenges: infrastructure gap, land unavailability, rising system-level costs
India has made steady progress in expanding solar and wind capacity, but the rapid scale-up has exposed gaps in infrastructure readiness. One of the key challenges is the availability of land and timely transmission connectivity.
Assocham notes that the delay in commissioning central transmission utility (CTU) substations and extra-high voltage transmission lines have resulted in congestion and renewable power curtailment. In several cases, developers have secured CTU connectivity but have not progressed with projects, blocking capacity for serious players.
At the same time, renewable generation remains unevenly distributed across a few states, increasing dependence on long-distance power transmission. This has pushed up system costs and transmission losses, even as renewable tariffs remain competitive at the project level.
Expectations: Tighter CTU rules, faster transmission rollout
There are calls for stricter enforcement of rules to prevent speculative holding of CTU connectivity. They believe unused connectivity should be surrendered within a defined timeframe so that transmission capacity is freed up for genuine renewable developers.
The industry is also seeking faster tendering and commissioning of CTU substations and transmission lines to ensure that renewable power evacuation keeps pace with generation capacity additions.
Assocham recommends that the government should promote distributed renewable energy generation in high-consuming states. Local generation, they say, will reduce transmission costs, lower losses and improve grid stability.
There is also a strong push to limit CTU charge waivers only to hybrid and firm and dispatchable renewable energy projects, while encouraging more state-level tenders connected to state transmission utilities. This, according to industry leaders, will help balance regional generation and avoid over-concentration in a few states.
Expectations: PLI extension for solar, green hydrogen
JM Financial recommends PLI extensions for solar modules and green hydrogen. It also recommends GST cuts on clean tech and green financing at low rates.
Deloitte however expects Iintroduction of group tax consolidation regime for the renewable energy sector. It says Most renewable energy companies don’t operate through one company.
They create multiple Special Purpose Vehicles (SPVs)—one for each solar or wind project—under a single parent company.Currently, each SPV is taxed separately.
Deloitte also asks tax incentives for nuclear start-ups and manufacturers as builiding nuclear energy projects are very expensive.
Deloitte added that tax and GST relief for Battery Energy Storage Systems (BESS)
Experts predict: Tighter RPO norms, policy push for nuclear power
Nuvama predicts Introduction of tighter RPO compliance norms in budget with higher mandatory renewable purchase targets and stronger enforcement measures for obligated entities.
Nuvama also expects GoI to announce some supportive policy measures to place nuclear power on a par with renewable energy and give nuclear projects access to green financing and remove it from CPCB’s red category.