India’s energy transition push continues with Nuclear Energy Mission, clean tech manufacturing

The union budget for FY26 continued with the government's emphasis on energy transition announcing a Nuclear Energy Mission with an outlay of ₹20,000 crore for research and development of small modular reactors (SMR).

Finance minister Nirmala Sitharaman, while presenting the budget, also announced measures to boost the manufacturing of components in the green energy space and support power transmission infrastructure, which is key to India's green energy goals.

She outlined a target to develop at least 100 GW of nuclear energy by 2047. India's nuclear power capacity currently stands at 8.18 GW, and the targeted 500 GW of non-fossil capacity by 2030 includes the projected nuclear capacity of 22.48 GW by 2030.

"Development of at least 100 GW of nuclear energy by 2047 is essential for our energy transition efforts. For an active partnership with the private sector towards this goal, amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act will be taken up," she said.

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Small modular reactors, which are in demand globally recently given their smaller size and lesser land requirement, also gained focus in the previous two budgets. The full budget for FY25 in July proposed the government's partnership with the private sector to develop SMR, while the interim budget in February announced funding of ₹1 trillion for R&D in this space.

Sitharaman on Friday said, "A Nuclear Energy Mission for research & development of Small Modular Reactors with an outlay of ₹20,000 crore will be set up. At least five indigenously developed SMRs will be operationalized by 2033."

Indigenization of the green energy supply chain also gained prominence in this budget. Under the National Manufacturing Mission announced by the finance minister on Saturday, the Centre will support manufacturing in the energy transition space, including solar photovoltaic cells, batteries for electric vehicles, electrolyzers, which are used in the production of green hydrogen, wind turbines, and grid-scale batteries.

"Given our commitment to climate-friendly development, the mission will support clean tech manufacturing. This will improve domestic value addition and build our ecosystem for solar PV cells, EV batteries, motors and controllers, electrolyzers, wind turbines, very high voltage transmission equipment and grid-scale batteries," said Sitharaman.

Naveen Khandelwal, CEO of BrightNight India, said, "A sharper focus on domestic supply chains, critical minerals, and clean tech manufacturing—solar PV, EV batteries, and electrolysers—underscores a clear intent to be Atmanirbhar (self-reliant) amid rising geopolitical uncertainties while leveraging comparative advantages.”

Furthering the transition agenda, the minister announced exempting 35 capital goods for EV battery manufacturing from basic customs duty, which would accelerate battery manufacturing in the country and lower the country's dependence on Chinese supplies. Transition in mobility is also a major focus area for the company under its plans to achieve net zero carbon emissions by 2070.

She also announced a policy for recovering critical minerals from tailings. Mineral tailings refer to the leftover waste after extracting minerals from ore. Critical minerals like lithium are key raw materials in the manufacturing of batteries and other energy transition components like solar modules.

Commenting on the budget, Union minister for power Manohar Lal said, "The government’s dedication to improving the financial and operational stability of electricity distribution companies, coupled with incentives for enhancing intra-state transmission capacity, will greatly boost the efficiency of the power sector."

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He also said that the exemption of the scrap of lithium-ion battery, lead, zinc and 12 more critical minerals from basic custom duty will help secure their availability for manufacturing of batteries in India and promote more jobs for the youth.

Reform measures for the power sector were also part of the budget, which is required for an efficient and swifter transition. Sitharaman announced support for the improvement of intra-state transmission capacity by the state government and incentivize reforms in the power distribution space.

"We will incentivize electricity distribution reforms and augmentation of intra-state transmission capacity by states. This will improve the financial health and capacity of electricity companies. Additional borrowing of 0.5% of GSDP will be allowed to states, contingent on these reforms," she said.

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Anil Rawal, MD & CEO of IntelliSmart Infrastructure, said, “A key highlight is the emphasis on strengthening electricity distribution, with plans to incentivize states to implement critical distribution reforms. This is a welcome step as it will encourage states to adopt measures like smart metering, which is the need of the hour for enhancing the overall systemic efficiencies of the power utilities and optimise electricity distribution."

The stress on transmission capacity gains significance as a strong transmission infrastructure is required for a stable power network fueled mainly by renewable energy. The Economic Survey of FY25 tabled in parliament by the minister on Friday noted that the progress in transmission capacity addition has been slow this fiscal due to heavy monsoon rains.