The Union Budget 2026–27 has prioritised energy security and transition stability over fresh capacity expansion, announcing targeted support for carbon capture, nuclear power and biogas while strengthening clean energy manufacturing supply chains.
Presenting the Budget in Parliament, Finance Minister Nirmala Sitharaman said the government’s approach would centre on affordability, reliability and long-term resilience as India’s energy demand rises amid geopolitical volatility.
A key announcement was an outlay of ₹20,000 crore over five years for Carbon Capture, Utilisation and Storage (CCUS) technologies. The fund is aimed at enabling emissions reduction in hard-to-abate sectors such as thermal power, refining, cement, steel and fertilisers, allowing existing infrastructure to operate with lower carbon intensity.
The Budget did not specify project-level incentives, indicating a long-term, technology-agnostic approach rather than immediate emissions-linked subsidies.
To support baseload power, the government extended the basic customs duty exemption on imports of equipment required for nuclear power projects till 2035. The move provides policy certainty for long-gestation nuclear investments and reinforces atomic energy’s role in India’s clean power mix as renewable penetration increases.
In a boost to bioenergy, the Budget excluded the biogas component from excise duty calculations on biogas-blended compressed natural gas (CNG). The measure is expected to improve project viability under the Sustainable Alternative Towards Affordable Transportation (SATAT) programme and strengthen farmer-linked biomass supply chains.
Instead of new solar or wind subsidies, the Budget focused on lowering input costs across clean energy supply chains. Customs duty exemptions were extended to lithium-ion battery manufacturing equipment, solar glass inputs and capital goods for processing critical minerals — all key to reducing import dependence.
The Budget also announced the restructuring of Power Finance Corporation and Rural Electrification Corporation to improve lending scale and efficiency, supporting long-term energy infrastructure investment.
Overall, Budget 2026–27 signals a calibrated energy transition strategy — emphasising security of supply, cost control and domestic capability building as India prepares for sustained energy demand growth.
