The Union Cabinet has approved the Small Hydro Power development scheme for the financial year (FY) 2026-27 to FY 2030-31, with an outlay of over Rs 25.84 billion. The scheme aims to install around 1,500 MW of small hydro power capacity during the period. The scheme aims to promote the development of small hydro projects ranging from 1 MW to 25 MW across various states. It places special emphasis on hilly and North Eastern regions, which have significant potential for such projects.
In North Eastern states and border districts, central financial assistance of up to Rs. 36 million per MW or 30 per cent of the project cost (whichever is lower) will be provided, subject to a maximum of Rs. 300 million per project. In other states, support of up to Rs. 24 million per MW or 20 per cent of the project cost will be available, capped at Rs. 200 million per project. Moreover, a total of Rs. 25.32 billion has been allocated for these projects.
Furthermore, the scheme will also encourage states to prepare detailed project reports (DPRs) for around 200 projects to build a future pipeline of small hydro developments. An allocation of Rs 300 million has been set aside to support state and central agencies in preparing these DPRs. The scheme is expected to attract investments of around Rs 150 billion in the hydro sector. This will boost clean energy development, encourage investment in remote and rural areas, and generate employment.