The Union Budget 2025-26 places a strong emphasis on renewable energy, environmental sustainability, and green infrastructure. Key initiatives include credit facilities for green projects, tax exemptions for clean energy manufacturing, incentives for electric vehicles (EVs), and policy reforms for nuclear energy development. The budget continues India’s transition towards self-reliance in renewable energy while integrating sustainable urban infrastructure and green financing mechanisms.
Key Highlights:
1. Green Energy Push:
oNational Manufacturing Mission to support clean technology manufacturing.
oTax exemptions on capital goods for solar PV cells, EV batteries, wind turbines, and grid-scale batteries.
oFocus on backward integration for renewable energy production.
2.Electric Vehicles & Battery Manufacturing:
o100% customs duty exemption on key components for lithium-ion battery manufacturing.
oExpansion of PLI schemes for EVs, battery storage, and charging infrastructure.
oPM e-Bus Sewa and PM e-DRIVE schemes introduced for public transport electrification.
3.Nuclear Energy Reforms:
oAmendments to the Atomic Energy Act and Civil Liability for Nuclear Damage Act to encourage private investment.
oRs 20,000 crore R&D initiative for Small Modular Reactors (SMRs) with 5 indigenous SMRs to be operational by 2033.
4.Power & Infrastructure Development:
o50-year interest-free loans to states linked to power sector reforms.
oPartial Credit Enhancement Facility by NaBFID to improve corporate bonds for green projects.
oFocus on distribution and transmission improvements.
5. Urban & Environmental Sustainability:
oExtension of Jal Jeevan Mission (JJM) till 2028 for 100% coverage.
oRs 1 lakh crore Urban Challenge Fund for green urban infrastructure.
oGreenfield airport and regional connectivity schemes under UDAN for reducing urban congestion.
6. Sustainable Manufacturing & Recycling:
o Duty exemptions on recycled non-ferrous metals (Copper, Zinc, Lead) to boost sustainability.
o Expansion of textile PLI for eco-friendly fabrics and sustainable cotton farming.
Detailed Breakdown of Key Measures
1. Green Energy Push
The budget aims to accelerate India’s transition to renewable energy by encouraging domestic manufacturing of clean energy technologies and reducing reliance on imports.
Key measures include:
·Tax exemption on 35 capital goods and machinery for solar PV cells, EV batteries, wind turbines, and grid-scale batteries.
·Incentives for hydrogen energy production through R&D initiatives.
·Backward integration to develop solar and wind energy components, making India a global supplier in the clean energy sector.
2. Electric Vehicles & Battery Manufacturing
Aiming to boost EV adoption, the government has introduced:
·Complete exemption from customs duty on cobalt powder, lithium-ion battery scrap, and 12 other critical minerals.
·Rs 2,819 crore allocation for PLI incentives for electric vehicles.
·PM e-Bus Sewa scheme (Rs 1,310 crore) and PM e-DRIVE scheme (Rs 4,000 crore) to support electric public transport.
·Promotion of domestic battery manufacturing plants to reduce India’s dependence on imported lithium-ion cells.
3. Nuclear Energy Reforms
For the first time, the budget introduces major private sector participation in nuclear energy, which includes:
· Amendments to the Atomic Energy Act and Civil Liability for Nuclear Damage Act to allow private investments.
· A dedicated R&D initiative of Rs20,000 crore for Small Modular Reactors (SMRs).
·5 indigenous SMRs to be operational by 2033 to boost India’s nuclear power capacity.
4. Power & Infrastructure Development
The budget lays a strong focus on electricity distribution and grid stability, ensuring energy access through:
· 50-year interest-free loans to states (Rs 1.5 lakh crore) for implementing power sector reforms.
· NaBFID to set up a Partial Credit Enhancement Facility (PCE) to boost bond financing for renewable projects.
· Measures to improve the financial health of power distribution companies and attract private investment.
5. Urban & Environmental Sustainability
Green urban development gets a push through:
· Rs 1 lakh crore Urban Challenge Fund to support projects focused on sustainable urban mobility, green buildings, and clean energy adoption.
· Jal Jeevan Mission (JJM) extended till 2028 for achieving 100% rural drinking water coverage.
· Greenfield airport in Bihar and expansion of the regional connectivity scheme (UDAN) to 120 new destinations for reducing urban congestion and boosting low-emission transport.
6. Sustainable Manufacturing & Recycling
The government is promoting eco-friendly production practices through:
· Duty exemptions on waste and scrap metals (Copper, Zinc, Lead) to support secondary metal recycling.
· Expansion of Production Linked Incentive (PLI) schemes for sustainable textiles and high-yielding cotton farming.
· Investment in technical textiles for eco-friendly fabrics, geotextiles, and agro-textiles.
Conclusion: The Union Budget 2025-26 takes bold steps towards a greener and more energy-secure India. It provides strong incentives for renewable energy, electric mobility, and sustainable urban development, reinforcing the government’s commitment to climate action while ensuring economic growth and energy security.
Akshay Singhania
Chartered Accountant
Mob.: 998151112
Email: akshay@itfc.in
