The finance minister released the Union Budget 2025-26 this month with a series of measures for the power and renewables sector. These provisions span various aspects of the electricity ecosystem including reforming the power distribution utilities, expanding transmission capacity, development of new nuclear projects, incentivising lithium-ion battery production, tariff reductions on solar imports and launching the National Manufacturing Mission.
As evident, there is immense focus on promotion of domestic manufacturing and security of supply chains, and this stands for the renewable energy sector as well. India is already one of the global leaders in terms of non-fossil fuel based power deployment with 300 GW of installations, and is targeting 500 GW of capacity by 2030. However, the country lags in terms of its domestic manufacturing capabilities to support the desired clean energy transition.
While the country has sufficient production capacity in the wind power space with almost 90 per cent of the manufacturing localised, there is a significant gap in the solar, electrolyser and battery storage space. Much of the most essential components for setting up solar power projects, which is a mature industry now, still are imported. And it is the same case with lithium-ion batteries. Moreover, in all these segments as well as in wind power, India still depends on huge volumes of imported critical minerals. Thus, the upcoming missions on critical minerals and manufacturing are of vital important for continued growth of India’s clean energy ambitions.
Going forward, it is also paramount to ensure that this expansion of the overall domestic manufacturing industry is green and sustainable. Thus, conscious steps need to be taken to substitute carbon-intensive manufacturing processes with cleaner and greener strategies. Further, there needs to be adequate policy support with incentives and access to finance to support a true clean energy transition for the future.
