India’s green lobby has found much to cheer about Union Budget 2025-26 particularly with the focus on boosting ongoing efforts towards cleaner energy and transport systems.
The Budget 2025 has introduced several measures to support domestic clean technology manufacturing, expand credit access, and enhance climate resilience in agriculture. A notable provision is the expansion of the credit guarantee scheme, which is expected to unlock Rs 1.5 lakh crore in additional credit over the next five years for MSMEs, startups, and exporters. This support is aimed at strengthening industries including clean technology and renewable energy.
#WATCH | Delhi: Union Finance Minister Nirmala Sitharaman says, "There is no reduction in the public spending on capital expenditure. We continue to place emphasis on the multiplier effect that capital expenditure done by government has shown has sustained us. We continue on… pic.twitter.com/aJ4ZvwRd7N
— ANI (@ANI) February 1, 2025
The budget also prioritises boosting domestic manufacturing in key clean energy areas. It focuses on increasing capacity in sectors such as solar PV cells, EV batteries, motors and controllers, electrolysers, wind turbines, high-voltage transmission equipment, and grid-scale energy storage. To further support local production, basic customs duties have been removed on cobalt powder, lithium-ion battery scrap, lead, zinc, and 12 additional critical minerals—a follow-up to the July 2024 policy that exempted 25 key minerals from import duties. This measure is expected to lower input costs, secure raw material supply chains, and promote job creation in renewable energy and electric mobility sectors. It also has the potential to spur investments in domestic manufacturing and promote sustainable mobility in India.
However the EV industry which was looking forward to a favourable tax structure that caters to different automotive technologies, did not find a mention in the Union Budget.
The budget announcement about renewed support for nuclear energy with the introduction of a Rs 20,000 crore Nuclear Energy Mission aimed at developing Small Modular Reactors (SMRs), signals India’s focus on cutting emissions in energy production. The initiative targets the operationalisation of at least five indigenously developed SMRs by 2033, positioning nuclear energy as a secure, low-carbon option to support long-term energy security and sustainability. Overall, this year’s budget aims to create a conducive environment for India to become a manufacturing hub for electric vehicles, driving both innovation and job creation in the process.
The Urban Challenge Fund announced in the budget that seeks to allocate up to Rs 1 lakh crore to modernise urban infrastructure and boost climate adaptation in Indian cities seeks to support projects under initiatives such as ‘Cities as Growth Hubs’, ‘Creative Redevelopment of Cities’, and improved ‘Water and Sanitation.’ The fund can help enhance the capacity of urban areas to adapt to extreme weather, mitigate urban heat islands, and manage water resources more effectively. With a financing model covering up to 25 per cent of project costs—requiring at least 50 per cent funding from bonds, bank loans, and PPPs—and an initial allocation of Rs 10,000 crore for 2025-26, the initiative is designed to drive resilient urban growth while integrating adaptation measures into the redevelopment process.
On Clean Transition Shruti Sharma, Lead Energy Program, International Institute for Sustainable Development said that while the country was taking first steps by incentivising electricity distribution reforms and enhancing intra‐state transmission capacity, consumption subsidies would continue to pull the sector down. The other concern is the missing solar energy to power irrigation.
On Sustainable Transport Mahua Acharya, Founder CEO, INTENT and former MD & CEO, Convergence Energy Services Limited, “The specific focus on Budget 2025 on clean tech manufacturing is obviously a welcome step. We must do all we can to produce in India - and to that extent, the recognition of the need for batteries and raw materials is a really welcome step! The manufacturing mission is an excellent move - and the recognition of the need for grid scale batteries, EV batteries, PV cells is spot on as India looks to transition rapidly into greener growth.”
