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					</table>With India now meeting half of its power consumption through renewable energy, the industry is heading into the Union Budget 2026 with its wish list shifting from “more capacity” to building the enablers needed to sustain rapid renewable growth &#8211; grid stability, energy storage scale-up, and a stronger domestic solar supply chain.
Finance Minister Nirmala Sitharaman is set to present the Union Budget 2026 on February 1, 2026, with the Economic Survey expected ahead of it.
This year, industry expectations have sharply <a href="https://www.mercomindia.com/solar-industry-2025-budget-wishlist" target="_blank" rel="noopener">shifted</a> from sustained growth to a greater focus on scaling up the various industry segments supporting renewable energy growth in the country.
In the previous Union Budget, the allocation for the solar sector <a href="https://www.mercomindia.com/budget-2025-clean-energy-manufacturing" target="_blank" rel="noopener">increased</a> from ₹150.61 billion (~$1.73 billion) to ₹242.24 billion (~$2.79 billion), while the National Green Hydrogen Mission allocation doubled from ₹3 billion (~$34.6 million) to ₹6 billion (~$69.24 million).
Solar Manufacturing: Deeper Incentives and Tax Support
Manufacturers reiterated the need to extend incentives across the value chain, particularly upstream, capital-intensive segments such as polysilicon, ingots, and wafers, and called for measures such as accelerated depreciation, rationalized duties on key inputs not available domestically, and targeted income-tax concessions to support backward integration.
Prashant Mathur, CEO of <a href="https://saatvikgroup.com/" target="_blank" rel="noopener">Saatvik Green Energy</a>, advocates a production-linked incentive (PLI) program for polysilicon, ingot, and wafer manufacturing, as well as accelerated depreciation benefits for solar manufacturing equipment.
D.V. Manjunatha, Founder and CMD of <a href="https://emmvee.com/" target="_blank" rel="noopener">Emmvee Photovoltaic Power</a>, pressed for the reintroduction of 80% depreciation for new manufacturing facilities to unlock the next phase of investment.
According to Mercom India Research, as of June 2025, Indian manufacturers had nearly 182 GW of solar module and over 86 GW of solar cell <a href="https://www.mercomindia.com/product/state-solar-manufacturing-india-1h-2025" target="_blank" rel="noopener">capacity</a> under construction.
Tanmoy Duari, CEO, <a href="https://axitecsolar.com/in" target="_blank" rel="noopener">AXITEC Energy India</a>, noted that incentives must be extended for fully integrated manufacturing from ingots and wafers to high-efficiency modules, and customs duties on critical imported inputs should be rationalized for critical raw materials that are not available domestically.
Avinash Hiranandani, Managing Director at <a href="https://www.renewsysworld.com/" target="_blank" rel="noopener">RenewSys</a>, called for the introduction of specific income-tax concessions of up to 10%-15% for at least five years for investors supporting backward integration across solar cells, wafers, and ingots.
He also demanded a three-year extension of the duty-free import of all raw materials, additives, and inputs used in polyolefin elastomer, ethylene-propylene elastomer, and ethylene-vinyl acetate encapsulants.
Hiranandani emphasized reinstating CAPEX incentive programs for investments in solar cells, wafers, and ingot manufacturing.
India is <a href="https://www.mercomindia.com/india-moves-to-secure-rooftop-solar-data-with-stricter-inverter-protocols" target="_blank" rel="noopener">seeking</a> to keep rooftop solar telemetry on India-based servers to prevent data leakage as the Ministry of New and Renewable Energy (MNRE) develops a national, vendor-neutral inverter data layer under the PM Surya Ghar program. The demand for domestic solar inverters is also growing.
Sunil Thamaran, Managing Director, <a href="https://enphase.com/en-in/homepage" target="_blank" rel="noopener">Enphase Energy (India)</a>, asked for targeted subsidies and rebates for technologies such as high-quality microinverters and lithium-ion battery storage to help lower costs, strengthen domestic supply chains, and expand rooftop solar adoption.
Larger Push for Battery Energy Storage Systems (BESS)
Energy storage emerged as a top priority, with industry voices calling for GST rationalization, expanded and more flexible viability gap funding (VGF), faster VGF disbursement timelines, and policy support for domestic manufacturing of battery materials and components.
Multiple stakeholders also urged the government to recognize storage as core grid infrastructure, given its role in frequency regulation, ramping support, and meeting evening peak demand.
Sunil Rathi, Executive Director at <a href="https://waaree.com/" target="_blank" rel="noopener">Waaree Energies</a>, hopes Budget 2026 makes energy storage a central pillar of renewable energy growth. He also called for stronger support for vertically integrated manufacturing across solar, batteries, and energy management systems, along with a more flexible viability framework to enable large-scale storage deployment, particularly when integrated with solar and hybrid projects.
Devansh Jain, Executive Director, <a href="https://www.inoxgfl.com/" target="_blank" rel="noopener">INOXGFL Group</a>, also concurred that the budget is expected to focus on increasing transmission capacity, enabling grid flexibility and storage, and resolving the ongoing issues required to achieve the capacity growth needed to meet India’s 2030 renewables target.
Kaushik Tanti, COO, <a href="https://replusengitech.com/" target="_blank" rel="noopener">Replus Engitech</a>, stated, expects the Ministry of Power to allocate VGF funds to support the additional setup of 100 GWh BESS capacity, and extend the PLI program across the storage ecosystem, including anode and cathode manufacturing.
Akshay Hiranandani, CEO at <a href="https://www.serenticaglobal.com/" target="_blank" rel="noopener">Serentica Renewables</a>, emphasized the need for VGF for grid-connected battery assets to support Grid India’s frequency regulation, manage ramping requirements, and meet evening peak demand.
According to Kishor Nair, CEO at <a href="https://avaada.com/" target="_blank" rel="noopener">Avaada Energy</a>, recognizing energy storage as a core power asset is a priority. “While electricity is GST-exempt, BESS and pumped storage services attract 18% GST, directly increasing the landed cost of renewable power,” he added. &#8220;Eliminating GST on storage charges will accelerate storage deployment and support grid reliability as renewable capacity scales.&#8221;
Srivatsan Iyer, Global CEO of <a href="https://www.herofutureenergies.com/" target="_blank" rel="noopener">Hero Future Energies</a>, observed that VGF has laid the foundation for BESS, but scaling now requires clearer tax policy, deeper financing pools, and policy stability.
Abhishek Goel, Vice President (Sales) at <a href="https://goodenough.energy/" target="_blank" rel="noopener">GoodEnough Energy</a>, stressed the need for an extended PLI program for advanced-chemistry cell battery manufacturing. “The government must consider reducing the GST on lithium-ion cells and BESS systems from the existing 18% to 5% to lower CAPEX for BESS manufacturing.”
He further flagged the need for clear battery recycling incentives and regulatory frameworks to support it, and for linkage with national goals for lithium, cobalt, and nickel recycling or local processing.
Shashank Sharma, Founder, Chairman, and CEO at <a href="https://sunsure-energy.com/" target="_blank" rel="noopener">Sunsure Energy</a>, said the government must reduce the VGF disbursement window for BESS projects to a single year, replacing the current framework that spreads across three years. “The entire VGF should be released within six months of the commercial operation date, once the project has successfully met all technical performance tests specified in the tender conditions,” he underlined, adding that 90% of the VGF, after the 10% released at financial closure, should be disbursed at COD, backed by a three-year bank guarantee, rather than the current staggered payout structure.
The industry also called for an extension of the waiver of interstate transmission system charges for BESS beyond the current timelines.
The residential sector is also expecting to see a push for solar-plus-storage solutions.
Shreya Mishra, CEO at <a href="https://www.solarsquare.in/" target="_blank" rel="noopener">SolarSquare</a>, hopes the existing subsidy for the PM Surya Ghar program is extended to another 5 to 10 million homes, but this time for solar paired with batteries.
Investments in Grid Stability
Companies highlighted that renewable additions must be matched with investments in transmission and evacuation, as well as advanced grid-stabilizing technologies such as static synchronous compensators, grid-forming inverters, dynamic line rating, and grid-forming storage assets, particularly as variable renewables become a larger share of the generation mix.
Neerav Nanavaty, CEO, <a href="https://www.blupineenergy.com/" target="_blank" rel="noopener">BluPine Energy</a>, said that focused investments in transmission and evacuation infrastructure will help maintain the momentum of the renewable energy sector.
Pointing to the need for greater investment in the grid sector, Akshay Hiranandani said that Grid India needs advanced tools such as Static Synchronous Compensators, grid-forming inverters, dynamic line rating, and grid-forming batteries. “Battery systems under Grid India’s control can support frequency regulation, manage ramping requirements, and meet evening peak demand.”
Simarpreet Singh, Director and CEO at <a href="https://hartek.com/" target="_blank" rel="noopener">Hartek Group</a>, underscored the pressing need to accelerate funding for smart grids, flexible transmission networks, high-voltage direct current corridors, and extra-high-voltage and gas-insulated substations.
Financing, Capital Recycling, and Tax Structure Fixes
Across the board, developers and manufacturers flagged the need to lower the cost of capital via long-term green finance, improve capital recycling through tax-efficient structures, and address structural tax anomalies affecting cash flows, especially around GST input credit refunds and customs duty implementation in specific operating models.
L. Agarwal, Managing Director at <a href="https://www.websolenergy.com/" target="_blank" rel="noopener">Websol Energy Systems</a>, said that affordable, long-term green financing will also be important to translating announced capacities into on-the-ground execution.
Nair pushed for rationalizing project finance norms by reducing the 75% land acquisition requirement to 50% or less, stating that waiving prepayment premium, particularly for capital-market refinancing, and removing GST on such premiums would materially improve project bankability.
Highlighting the importance of enabling efficient capital recycling, Nair suggested introducing a zero-income tax on dividends distributed by renewable energy special purpose vehicles to their holding companies would help lower financing costs and tariffs.
Purpose-built financial mechanisms such as a dedicated renewable energy fund, a separate budget line under Micro, Small &amp; Medium Enterprises or Startup India for non-rated but high-potential companies, and a clear policy framework enabling direct partnerships between public sector undertakings and private developers beyond traditional tenders will help accelerate the energy transition, said Rupal Gupta, Founder, Managing Director, and CEO, <a href="https://orianapower.com/" target="_blank" rel="noopener">TrueRE Oriana Power</a>.
He added that a government-backed risk-mitigation framework could help address payment delays and market uncertainties while boosting investor confidence.
Singh added that new green finance instruments, such as sovereign green bonds and climate-focused funds, can further accelerate adoption while attracting long-term capital.
Manufacturers repeatedly flagged structural tax anomalies, particularly around customs duties and GST, that are affecting cash flows and cost competitiveness.
The current structure of basic customs duty (BCD) poses challenges for solar cell manufacturers operating in Special Economic Zones, according to Agarwal.
He added that despite most inputs being indigenous or duty-free, BCD is applied on the entire value when selling into the domestic market, making SEZ-based cell manufacturing uncompetitive.
Avinash Hiranandani added that the current GST framework must be corrected to allow refunds of accumulated input tax credit on services, restoring tax neutrality and improving cash flow sustainability for the solar manufacturing sector, which is in its growth phase.
Investments in R&amp;D and Green Skilling
Research and Development (R&amp;D) and workforce readiness were highlighted as essential enablers of long-term competitiveness.
Singh said that the Budget 2026 should significantly scale up R&amp;D investments, technology incubators, and academic–industry collaboration.
Duari noted that budgetary support for R&amp;D, advanced technologies such as TOPCon and HJT, and skilling programs will help Indian manufacturers compete globally.
Avinash Hiranandani added that to build global-scale technology capabilities, a 200% income-tax deduction for in-house R&amp;D expenditure should be reinstated.
According to Goel, the government must allocate dedicated funds for battery testing labs and R&amp;D centers, provide support for certification facilities, and develop indigenous technology standards and skills.

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