In a major push toward clean and sustainable energy, the Union Cabinet has approved a new Small Hydro Power (SHP) Development Scheme for the period FY2027 to FY2031.
The scheme, with a total outlay of ₹2,584.60 crore, aims to install small hydro projects with a combined capacity of around 1,500 MW, strengthening India’s renewable energy portfolio.
Focus on Small Hydro Projects
The initiative, led by the Ministry of New and Renewable Energy (MNRE), will support hydro projects with capacities ranging from 1 MW to 25 MW.
These projects are particularly suited for:
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Hilly regions
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North-eastern states
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Remote and difficult-to-access areas
The scheme is expected to unlock the untapped hydro potential in these regions.
Financial Support for States
The government has outlined different financial assistance structures:
For North-Eastern & Border Areas
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₹3.6 crore per MW or 30% of project cost (whichever is lower)
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Maximum limit: ₹30 crore per project
For Other States
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₹2.4 crore per MW or 20% of project cost (whichever is lower)
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Maximum limit: ₹20 crore per project
This targeted support will make projects more viable, especially in challenging terrains.
₹15,000 Crore Investment Boost Expected
Out of the total outlay, around ₹2,532 crore is earmarked for project development. The scheme is expected to:
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Attract ₹15,000 crore in investments
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Promote domestic manufacturing of equipment
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Support the vision of Atmanirbhar Bharat
Creating Jobs and Supporting Rural Economy
The scheme is projected to generate:
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51 lakh person-days of employment during construction
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Additional jobs in operation and maintenance
Since these projects are mostly located in rural areas, they will significantly contribute to local economic development.
Pipeline of Future Projects
To ensure long-term growth, the government will also:
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Support preparation of Detailed Project Reports (DPRs)
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Create a pipeline of around 200 new small hydro projects
An allocation of ₹30 crore has been set aside for this purpose.
Environment-Friendly Energy Solution
Small hydro projects are considered highly sustainable because they:
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Require minimal land acquisition
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Avoid large-scale displacement
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Reduce transmission losses due to decentralized generation
They also have a long lifespan of 40 to 60 years, making them a reliable energy source.
Government’s Vision
Commenting on the development, Pralhad Joshi, Union Minister for New & Renewable Energy, said the scheme is a significant step toward:
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Strengthening renewable energy capacity
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Enhancing energy security
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Promoting sustainable growth
A Step Towards Clean Energy Future
The Small Hydro Power scheme is expected to revitalise the sector, accelerate renewable energy adoption, and contribute to India’s long-term climate and energy goals.
With its focus on decentralisation, sustainability, and rural development, the initiative marks an important step toward a greener and more self-reliant energy future.