THEBUSINESSBYTES
BUREAU
NEW
DELHI, MARCH 18, 2026
The Union Cabinet,
chaired by Narendra Modi, has approved the ambitious ‘Small Hydro Power (SHP)
Development Scheme for the period FY 2026-27 to FY 2030-31’, marking a
significant step towards accelerating India’s clean energy transition and
strengthening power infrastructure in remote regions.
With a total outlay
of Rs. 2,584.60 crore, the scheme aims to facilitate the installation of Small
Hydro Power projects with an approximate capacity of 1,500 MW. Targeting
projects ranging between 1 MW and 25 MW, the initiative is expected to unlock
the vast hydro potential of hilly terrains and North Eastern states, where such
projects are particularly viable.
The scheme offers
robust financial support to encourage investments in these regions. In North
Eastern states and districts along international borders, central financial
assistance of up to Rs. 3.6 crore per MW or 30% of the project cost — capped at
Rs. 30 crore per project — will be provided. For other states, assistance of
Rs. 2.4 crore per MW or 20 per cent of project cost, subject to a maximum of
Rs. 20 crore per project, has been предусмотрено. A substantial Rs. 2,532 crore
has been earmarked specifically for project development, which is expected to
catalyse investments worth Rs. 15,000 crore in the sector.
Beyond clean energy
generation, the initiative is poised to deliver a strong economic boost. It is
projected to generate 51 lakh person-days of employment during the construction
phase, while also creating sustained livelihood opportunities in operations and
maintenance, particularly in rural and remote areas. The scheme will further
reinforce the vision of Atmanirbhar Bharat by ensuring that 100% of plant and
machinery is sourced domestically.
In a forward-looking move, the Cabinet has also allocated Rs. 30 crore to support state and central agencies in preparing detailed project reports (DPRs) for nearly 200 prospective projects, thereby building a robust pipeline for future development.
The decentralized nature of SHP projects ensures minimal transmission requirements, reducing energy losses while enhancing efficiency. Additionally, these projects are environmentally sustainable, avoiding large-scale land acquisition, deforestation, and displacement, and offering long-term operational lifespans of 40 to over 60 years.
