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Budget 2025 and India’s Energy Transition
Context:
The Union Budget 2025 has reinforced energy security and green transition as its central themes. The Focus areas include renewable energy, nuclear power expansion, green hydrogen, electric mobility, and domestic manufacturing.
About Energy Security Initiatives in the Budget
- The Budget aims at reducing import dependence, ensuring supply chain resilience, and enhancing climate-friendly infrastructure.
- The Focus Areas of the Budget for energy transition include
- Nuclear power
- New and Renewable Energy
- Strengthening Domestic Manufacturing and Supply Chains
- However, challenges persist in implementation efficiency, infrastructure readiness, and equitable distribution of benefits.
Key Initiatives in Nuclear Power
- The Nuclear Mission for Viksit Bharat aims for 100 GW of nuclear capacity by 2047.
- Proposed amendments to the Atomic Energy Act and Civil Liability for Nuclear Damage Act to attract private sector investment.
- Budget cut for the Department of Atomic Energy: reduced from INR 249 billion to INR 240 billion.
- INR 200 billion was allocated for Small Modular Reactors (SMRs) with a target of deploying five reactors by 2033.
- Challenges: Previous nuclear expansion plans remain delayed; 10 reactors announced in 2017 remain non-operational.
Budget Allocation in New and Renewable Energy
- Ministry of New and Renewable Energy (MNRE) Budget: Increased 39% to INR 256.49 billion (from INR 191 billion in FY25).
- Solar energy receives the largest share: INR 241 billion, including:
- PM Surya Ghar Muft Bijli Yojana: INR 200 billion (81% increase from FY25).
- PM KUSUM Scheme: INR 2.6 billion for solar pumps and solarisation of existing pumps.
- Green Energy Corridors (GECs): INR 60 billion for grid modernisation and renewable energy integration.
- Revamped Distribution Sector Scheme (RDSS): INR 160 billion for DISCOM reforms.
- National Green Hydrogen Mission: Funding doubled to INR 6 billion.
- Challenges: Uneven rooftop solar adoption, subsidy bottlenecks, and DISCOM financial constraints.
Strengthening Domestic Manufacturing and Supply Chains
- Tax reforms for clean energy:
- Basic Customs Duty removed on critical minerals (lithium, cobalt, zinc, lead, etc.).
- National Critical Minerals Mission: INR 41 billion for domestic mineral exploration.
- PLI Scheme Expansion:
- Advanced Chemistry Cell Battery Storage: INR 15.58 billion (up from INR 1.54 billion).
- Automobiles & Auto Components: INR 281.88 billion (up from INR 34.69 billion).
- PME-DRIVE Initiative: Support for EV manufacturing and affordability.
- National Manufacturing Mission: MSME support for solar PV cells, EV batteries, wind turbines, and grid-scale storage.
- Challenges: Limited MSME financing, workforce skilling gaps, and reliance on imports for high-tech components.
Gaps in the Budget for India’s Energy Transition
- Energy Efficiency Programs Underfunded: INR 160 billion allocated, lower than renewable energy investments.
- Equity Issues in Rooftop Solar Adoption: Poor households face barriers due to lack of property ownership and terrace space.
- DISCOM Financial Instability: Persistent revenue losses, high debt burdens, and subsidy delays.
- Slow Progress in Nuclear Power Expansion: Historical delays in reactor commissioning raise concerns over implementation feasibility.
- Green Hydrogen Ecosystem Still Developing: Lack of large-scale electrolyser manufacturing and hydrogen infrastructure.
