In a significant boost to India's clean energy transition, the Union Cabinet has approved the Small Hydro Power (SHP) Development Scheme for the period FY27 to FY31. With a financial outlay of Rs 2584.60 crore, the scheme aims to install approximately 1,500 megawatt (MW) of renewable capacity.  

The scheme will support development of small hydro projects (ranging from 1 MW to 25 MW capacity) across different states, with a special focus on hilly and North Eastern states with high potential for such projects. Under the scheme, central financial assistance of Rs 3.6 crore per MW or 30% of the project cost (whichever is lower) will be provided for projects in North Eastern states and districts with international borders, with a maximum limit of Rs 30 crore per project. For projects in other states, Rs 2.4 crore per MW or 20% of project cost, whichever is lower with a cap of Rs.20 crore per project would be available. This will help in tapping the small hydro potential in remote and difficult to reach locations.  An amount of Rs 2,532 crore has been earmarked for such projects. 

This is likely to bring in Rs 15,000 crore of investment in the small hydro sector giving a boost to the clean energy initiative, investment in remote and rural areas and creating significant employment opportunities.  The investment will also leverage 100% of the plant and machinery from indigenous sources fulfilling the objective of Atmanirbhar Bharat. The scheme will also incentivise the states to prepare the detailed project report for about 200 projects to create a pipeline of small hydro projects in future.  An amount of Rs 30 crore has been kept to support state and central government agencies to prepare such DPR. In addition, the scheme is expected to generate around 51 lakh person days of employment during the project construction and will also enable employment in maintenance and operation of these SHPs which will come up in largely rural and remote locations.