The Union Cabinet on Wednesday, 18 March, approved the Small Hydro Power (SHP) Development Scheme for the period FY 2026-27 to FY 2030-31, with a total outlay of ₹2584.60 crore to install approximately 1500 MW of small hydro capacity across the country.
The scheme will support small hydro projects ranging between 1 MW and 25 MW and is expected to particularly benefit hilly regions and North Eastern states, where there is significant untapped hydro potential.
Under the scheme, enhanced financial assistance has been designed for strategic and remote regions.
In North Eastern states and districts with international borders, support of up to ₹3.6 crore per MW or 30 per cent of project cost will be provided, subject to a maximum of ₹30 crore per project.
For other states, assistance of up to ₹2.4 crore per MW or 20 per cent of project cost will be available, with a cap of ₹20 crore per project.
Out of the total allocation, ₹2,532 crore has been earmarked for project implementation.
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The scheme is expected to attract investments of around ₹15,000 crore in the small hydro sector, strengthening clean energy deployment in remote and rural areas.
To ensure a steady pipeline of future projects, the scheme includes support for preparation of detailed project reports for around 200 projects. An allocation of ₹30 crore has been made for this purpose to assist state and central government agencies.
The programme is projected to generate 51 lakh person days of employment during the construction phase, along with additional long-term employment opportunities in operation and maintenance of these projects, largely in rural and remote regions.
Small hydro projects are environmentally sustainable as they avoid large-scale land acquisition, deforestation, and displacement.
Being decentralised in nature, they require minimal transmission infrastructure, which helps reduce transmission losses.
The scheme also supports the Atmanirbhar Bharat initiative by ensuring that 100 per cent of plant and machinery is sourced domestically.
With project lifespans typically ranging from 40 to over 60 years, these developments are expected to provide long-term economic and employment benefits while contributing to India’s renewable energy goals.
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