Union Budget 2026 – RE Wishlist

Our sector, the renewable energy industry, has made great strides over the last year – in wind alone, we collectively added 6+ GW of capacity in the calendar year of 2025. Similarly, solar has added a whopping 30+ GW in the first three quarters of this fiscal (April-December 2025) already. A slew of policy measures along with the ease of FDI flow have made possible this pace. Yet this is not enough. Considering the world’s extremely patchy and uncertain geopolitics currently, India, now more aggressively than ever, has to work towards its energy security. We have no other choice! And no other opportunity than the Union Budget to lay down sturdier rules and policies for the sector’s continued momentum and further growth.

Took a pause to list down the immediate support the sector needs. Here they are, under respective heads, to make them easily relatable:

Policy support:

1. On the one-time investment on transmission lines and the money being lost on delayed generator evacuation, few even resulting in loan defaults, the industry requests budgetary support for generator loans
2. As India pushes for grid integration in the near future, the industry requests policies to permit the installation of batteries to bring about grid stability. Additionally, with DSM kicking in from 1st April 2026, the industry requests for grants for grid integration to support wildly fluctuating forecasts

Taxation support:

1. Our foremost taxation request is for a uniform Goods and Services Tax (GST) rate of 5% for BESS, thereby aligning it with other renewable energy devices. Currently, solar panels are taxed at 5% vis-à-vis standalone batteries at higher slabs of 18% or 28% depending on the technology and application. Reducing this rate would significantly lower the capital expenditure (CAPEX) for grid-scale storage, making "Round-the-Clock" (RTC) renewable power more affordable for distribution companies
2. We understand that high Basic Customs Duty (BCD) of 25% on cells and 40% on modules were intended to protect domestic manufacturers. However, it has increased the cost of our projects. I highlight this in various forums, reiterating now too that a temporary reduction or exemption of these duties is necessary until domestic production capacity under the PLI (Production Linked Incentive) scheme fully matures. No point stressing developers with supply chain disruptions. Instead, the duty cut will help us maintain the viability of our project pipelines and meet the commissioning deadlines
3. We further seek the extension of the Section 115BAB concessional corporate tax rate of 15% for new power generation companies. Originally set to expire for units commencing operations after March 2024, this extension, if allowed, can attract long-term private equity and foreign direct investment. Alternatively, a 10-year tax holiday would allow us to reinvest our early-year profits into further capacity expansion
4. On the BESS front (which has a shorter lifespan than solar or wind assets), we seek accelerated depreciation and investment-linked tax credits to help us recover the high capital costs of BESS. These incentives would improve project bankability and encourage the integration of storage, effectively reducing energy intermittency and stabilizing the national grid

Financing support:

1. I strongly request that the renewable sector should be in priority sector lending. Doing so, and treating them as PPP infrastructure will unlock massive credit flow while reducing the land-to-financing ratio from 75% to 50%
2. And EPFO should be allowed to be invested below AA+ category. Relaxing EPFO investment norms will unlock massive pension funds to tap into a wider pool of green bonds

Other areas:

1. In other areas, we would like to see the promotion of investments in transmission corridor. This is an imperative to ensure power generated in resource-rich remote areas is efficiently evacuated to the national grid
2. Provide clarity on TRC for claiming tax treaty/ GAAR matter pursuant to SC order and avoid reopening of old cases to build investor confidence

Once again, these are sweeping areas of support that, if provided in alignment, can help us take longer and stronger strides towards building capacity within optimal timelines. India’s RE sector is itching to enter the matured phase. The above can push us there!