Budget 2026 Clean Energy Manufacturing Push: Domestic Production and Carbon Capture Investment

Union Budget 2026-27 marks strategic pivot in India's energy transition towards domestic manufacturing and industrial decarbonisation with clean energy spending rising 40% year-on-year to approximately $5 billion. Budget allocates resources for carbon capture utilization and storage, battery storage systems, domestic manufacturing incentives and critical mineral supply chains reflecting stronger industrial policy approach. Import duties removed on lithium-ion battery cells, solar glass, nuclear equipment and machinery for critical mineral processing previously ranging from 2.5 to 7.5 percent. Data centers designated as critical infrastructure with foreign investor tax holidays extended to 2047 and 15% safe-harbour regime introduced for domestic operators. Focus on building resilient financial ecosystem through enhanced support for renewable energy certificates and grid stability measures. Budget commits Rs 20,000 crore to carbon capture across core industrial sectors supporting long-term investments and accelerated capacity expansion. PM Surya Ghar Muft Bijli Yojana receives INR 5,000 crore increase significantly strengthening rooftop solar deployment while higher bioenergy allocations support decentralized clean energy. Manufacturing push targets entire solar value chain with Production-Linked Incentive scheme extensions and grid equipment manufacturing to reduce import dependence. India currently has 37 GW of PV cell manufacturing capacity but utilization below 30% with local content requirements at cell level scheduled for June 2026. Policy framework aims to connect supply chains manufacturing and finance into single coherent clean energy strategy addressing structural constraints and execution risks while supporting energy security objectives.