Govt FY26 Budget Drives Solar Sector Growth with Increased Support

The Indian government has reinforced its commitment to renewable energy in the FY26 Budget, allocating Rs 242 billion to the solar sector—marking a 60% year-on-year (YoY) increase, according to a report by Jefferies. This substantial push focuses on expanding rooftop solar installations and solar pump schemes to enhance energy accessibility.

Jefferies highlighted, "FY26 budget gives a continued push to solar sector and saw the extension of flagship schemes of solar rooftop, solar pumps, with budget allocations rising 3.2x and 1.7x vs FY25 budget estimates."

A key highlight is the PM Surya Ghar Muft Bijli Yojana, which aims to install 10 million residential solar rooftops. The scheme's allocation has surged by 80% to Rs 200 billion for FY26, compared to the revised estimate for FY25. Initially approved on February 29, 2024, the scheme carries a total outlay of Rs 750 billion through FY27, offering up to 60% subsidy for solar systems.

The PM-KUSUM scheme, focused on solar powered pumps for farmers, has also seen a budgetary rise to Rs 26 billion from Rs 15 billion in FY25, reinforcing efforts to integrate solar energy into agriculture. The National Manufacturing Mission is also expected to bolster domestic solar equipment production. However, Jefferies pointed out the absence of clarity on incentives for battery energy storage system, a critical factor in renewable energy integration.

The increased allocations signal India's strong push towards clean energy, setting the stage for an accelerated transition to sustainable power solutions.