In a major step to expand renewable energy capacity, the Union Cabinet on Wednesday approved the ‘Small Hydro Power (SHP) Development Scheme’ for the period FY 2026–27 to FY 2030–31, with a total outlay of ₹2,584.60 crore.
Announcing the decision, Information and Broadcasting Minister Ashwini Vaishnaw said the initiative aims to facilitate the installation of small hydro projects with an estimated capacity of 1,500 MW across the country.
Advertisement
“The scheme will accelerate the development of small hydro projects, particularly in remote and hilly regions, while contributing to India’s clean energy goals,” Vaishnaw said, adding that it would also generate employment and promote investment in rural areas.
Advertisement
The scheme targets projects with capacities ranging from 1 MW to 25 MW and is expected to benefit states with significant hydro potential, especially in the North Eastern region and other hilly areas.
To encourage development in these regions, higher central financial assistance has been proposed for projects located in North Eastern states and districts along international borders.
These projects will be eligible for support of up to ₹3.6 crore per MW or 30% of the project cost, subject to a maximum of ₹30 crore per project. For projects in other states, assistance will be capped at ₹2.4 crore per MW or 20% of the project cost, with a maximum limit of ₹20 crore per project.
Out of the total allocation, ₹2,532 crore has been earmarked for the implementation of SHP projects. Officials said the scheme is likely to attract investments of around ₹15,000 crore in the sector, providing a strong boost to clean energy initiatives while ensuring that plant and machinery are sourced domestically in line with the vision of self-reliance.
The scheme also focuses on creating a pipeline of future hydro projects by supporting the preparation of detailed project reports (DPRs). Around ₹30 crore has been allocated to assist central and state agencies in preparing DPRs for nearly 200 projects.
According to government estimates, the initiative will generate approximately 51 lakh person-days of employment during the construction phase, along with additional long-term jobs in operations and maintenance. Given their decentralised nature, small hydro projects require minimal transmission infrastructure, which helps reduce transmission losses and improve overall efficiency.
Highlighting the environmental benefits, Vaishnaw said such projects are sustainable as they avoid large-scale land acquisition, deforestation, and displacement.
“These projects will not only strengthen India’s renewable energy portfolio but also promote socio-economic development in remote regions by creating durable infrastructure and long-term employment opportunities,” he said.
With project life spans ranging from 40 to over 60 years, the scheme is expected to revitalise the small hydro sector, accelerate the use of untapped hydro potential, and support India’s transition towards a cleaner and more self-reliant energy future.
Advertisement
