Indian Finance Minister Nirmala Sitharaman on Saturday announced a sweeping set of measures to bolster the country’s environmental, social, and governance agenda, with a particular focus on sustainability, clean energy, and green technology manufacturing.
“Our development track record of the past 10 years and structural reforms have drawn global attention. Confidence in India’s capability and potential has only grown in this period,” said Sitharaman in her opening remarks of the Union Budget 2025-2026.
Nuclear Energy and Clean Power Push
A key budget highlight was the Nuclear Energy Mission for Viksit Bharat, targeting the development of at least 100 gigawatts of nuclear energy by 2047 as part of India’s energy transition.
The government also plans to amend the Atomic Energy Act and the Civil Liability for Nuclear Damage Act to encourage private sector participation.
Additionally, a ₹20,000 crore ($2.4 billion) fund has been allocated for the research and development of Small Modular Reactors, with at least five operational SMRs expected by 2033.
Boost for Clean Tech Manufacturing
The budget included provisions to scale up solar PV cells, electric vehicle batteries, electrolyzers, wind turbines, and high-voltage transmission equipment to advance domestic manufacturing in the green sector.
“Given our commitment to climate-friendly development, the Mission will also support Clean Tech manufacturing. This will aim to improve domestic value addition and build our ecosystem,” said Sitharaman.
Grid Infrastructure and Transmission Capacity
With the increasing penetration of renewable energy sources, the government has pledged to enhance the intra-state power transmission network, allowing additional borrowing of 0.5 percent of Gross State Domestic Product or states that comply with power sector reforms.
The move aims to bolster financial health and operational efficiency in India’s electricity distribution companies.
Urban Sustainability and Water Reforms
The Jal Jeevan Mission, which has provided potable tap water to 15 crore rural households, will be extended until 2028 with enhanced funding.
The government will also launch a ₹1 lakh crore Urban Challenge Fund to develop cities as growth hubs, emphasizing water sanitation and sustainability.
Maritime and Circular Economy Initiatives
The government also plans to overhaul its Shipbuilding Financial Assistance Policy, introducing credit incentives for shipbreaking activities to promote the circular economy.
A Maritime Development Fund with a corpus of ₹25,000 crores will also be established to support long-term financing in the sector. Nearly half of the funds are expected from private players and port revenues.
Critical Minerals and Battery Manufacturing
Recognizing the strategic importance of critical minerals for India’s energy security, Sitharaman announced tax exemptions on importing lithium-ion battery components, cobalt powder, and lead and zinc waste materials.
This is aimed at securing a steady supply chain for EV battery manufacturing and bolstering India’s position in the global clean energy transition.
Encouraging First-time Entrepreneurs
The budget also announced a new scheme for 5 lakh first-time women entrepreneurs from the scheduled castes and scheduled tribes. The program will provide term loans up to ₹2 crores during the next 5 years.
The scheme will incorporate lessons from the successful Stand-Up India scheme. Online capacity building for entrepreneurship and managerial skills will also be organized.
Financial Reforms and ESG Compliance
In a bid to strengthen India’s ESG compliance, the finance ministry will introduce tax incentives for businesses that adopt net-zero targets and sustainability-linked investments. Additionally, an expanded Green Finance Framework is in the works to provide concessional loans for enterprises engaged in green infrastructure projects.
India’s latest budget reaffirms its commitment to a low-carbon economy while creating incentives for clean energy innovation, sustainable infrastructure and financial mechanisms that support ESG compliance. It aims to position the country as a global leader in climate-friendly industrialization through policy reforms, fiscal incentives, and public-private partnerships.
