Cabinet Approves Small Hydro Power Development Scheme

The Union Cabinet has approved the Small Hydro Power (SHP) Development Scheme for the period FY 2026–27 to FY 2030–31, with a total outlay of ₹2,584.60 crore. The scheme targets the addition of approximately 1,500 MW of small hydro power capacity across the country and is expected to generate around 51 lakh person-days of employment during the construction phase.

Further, sustained employment opportunities for operation and maintenance of projects will be created in rural and remote regions.

The scheme will support different states’ small hydro power projects with a capacity of between 1 MW and 25 MW, which are administered by the Ministry of New and Renewable Energy (MNRE). These projects are positioned as decentralised renewable energy solutions and seek to reduce the dependency of remote regions on conventional fuels by providing electricity.

The framework seeks to strengthen clean energy capacity through growth in underserved regions by combining financial support and infrastructure development. It also provides for structured monitoring and financial assistance linked to project milestones, ensuring accountability and timely execution.

The scheme provides differentiated financial support based on project location:

• For North-Eastern States and International Border Districts, assistance is capped at ₹3.6 crore per MW or 30% of project cost (whichever is lower), subject to a maximum of ₹30 crore per project.
• For other states, support is capped at ₹2.4 crore per MW or 20% of project cost (whichever is lower), subject to a ceiling of ₹20 crore per project.
• Support is allocated for the preparation of Detailed Project Reports (DPRs) for at least 200 projects, with separate allocation of ₹30 crore to strengthen the project pipeline of central and state agencies.

Investments of approximately ₹15,000 crore in the small hydro sector are expected to be mobilized through the scheme. It also promotes the use of indigenous plant and machinery, which will contribute to Atmanirbhar Bharat and support domestic manufacturing and supply chains.

Focus has been laid on improving project viability, enabling faster execution, and ensuring efficient deployment of SHP capacity, particularly in geographically challenging regions.

Capacity and Regional Potential India has an estimated small hydro power potential of approximately 21,133.61 MW across 7,133 identified sites, of which about 5,171 MW (around 24.5%) has been harnessed.

The Northern region accounts for nearly 38% of this potential, while the North-Eastern region contributes approximately 15%, making these regions priority areas for expansion. The Southern region contributes around 26%, followed by the Western and Eastern regions with approximately 14% and 7% respectively.

In conclusion, the scheme outlines targeted measures to support implementation, improve project viability, and ensure a steady pipeline of SHP projects across regions. SHP projects are environmentally sustainable, involving limited land use and minimal displacement of communities. The initiative is also expected to promote socio-economic development in remote regions by encouraging local investment and generating long-term employment.