Budget 2026 Shifts Clean Energy Strategy Toward Domestic Manufacturing and Deep Decarbonisation – EQ

In Short : Budget 2026 marks a strategic shift in India’s clean energy agenda by prioritising domestic manufacturing and large-scale decarbonisation. The policy focus moves beyond capacity addition to strengthening supply chains, boosting indigenous production of clean technologies, and enabling low-carbon industrial transformation. The approach aims to create long-term economic value while accelerating climate action.

In Detail : Budget 2026 signals a major reorientation of India’s clean energy strategy, moving from a primary focus on renewable capacity addition to a broader emphasis on domestic manufacturing and systemic decarbonisation. The budget reflects a more mature phase of the energy transition, where building local industrial capability and reducing emissions across sectors have become central priorities.

A key feature of the new approach is the strong push for manufacturing of clean energy equipment within the country. The budget highlights the importance of strengthening domestic supply chains for solar modules, wind turbines, batteries, electrolysers, and other critical components to reduce import dependence and enhance energy security.

This manufacturing-led strategy is expected to generate significant economic benefits, including job creation, industrial growth, and technological innovation. By promoting large-scale production of clean technologies, the government aims to position India as a global manufacturing hub for renewable and low-carbon solutions.

Decarbonisation of hard-to-abate sectors has also emerged as a major policy focus under Budget 2026. Industries such as steel, cement, fertilisers, and chemicals are being encouraged to adopt cleaner processes, alternative fuels, and energy-efficient technologies to reduce their carbon footprint.

Green hydrogen features prominently as a key enabler of industrial decarbonisation. The budget underscores the role of hydrogen in replacing fossil fuels in industrial processes, long-haul transport, and energy storage, while supporting infrastructure development for production, storage, and transmission.

The budget also places strong emphasis on energy storage and grid modernisation. Investments in battery storage, pumped hydro, and smart grid technologies are seen as essential for integrating higher shares of renewable energy and maintaining grid stability.

Financial mechanisms and incentives form a critical part of the clean energy push. Budget 2026 outlines enhanced funding support, viability gap mechanisms, and policy incentives to attract private investment into manufacturing and decarbonisation projects.

From a climate perspective, the reoriented strategy aligns India’s economic growth objectives with its long-term net-zero ambitions. Instead of viewing clean energy only as an environmental goal, the budget positions it as a core pillar of industrial and economic policy.

Overall, Budget 2026 represents a structural shift in India’s clean energy roadmap. By focusing on manufacturing strength and deep decarbonisation, the government is laying the foundation for a more resilient, competitive, and low-carbon economy in the decades ahead.