The Union Cabinet on Wednesday approved a ₹2,584.60 crore Small Hydro Power (SHP) Development Scheme for the period 2026–27 to 2030–31, aimed at adding around 1,500 MW of capacity through projects in the 1–25 MW range.
The scheme seeks to support the development of small hydro projects across states, with a focus on hilly and northeastern regions, where such projects are considered more viable.
India has an estimated small hydro potential of over 20 GW, of which only a portion has been developed so far.
Under the scheme, higher central financial assistance will be provided to projects in northeastern states and border districts, at ₹3.6 crore per MW or 30 percent of project cost, subject to a cap of ₹30 crore per project. In other states, assistance will be limited to ₹2.4 crore per MW or 20 percent of project cost, with a cap of ₹20 crore per project.
The government has earmarked ₹2,532 crore for project support and expects the scheme to attract investment of around ₹15,000 crore in the small hydro sector.
The scheme also provides for financial support to prepare detailed project reports (DPRs) for around 200 projects, with an allocation of ₹30 crore for state and central agencies.
Officials said the initiative is expected to generate around 51 lakh person-days of employment during the construction phase, while also creating long-term operational jobs in remote and rural areas.
Small hydro projects, which are decentralised in nature, require limited transmission infrastructure and are seen as environmentally sustainable due to lower land acquisition and minimal displacement.
The government said the scheme is aimed at accelerating the development of small hydro capacity, particularly in remote regions, while contributing to the country’s clean energy goals.
