Cabinet approves scheme on ‘Small Hydro Power (SHP) Development Scheme for the period FY 2026-27 to FY 2030-31’

**Executive Summary** The Union Cabinet has approved the ‘Small Hydro Power (SHP) Development Scheme’ for FY 2026-27 to FY 2030-31 with a total outlay of Rs. 2584.60 crore. The scheme aims to install approximately 1500 MW of capacity through projects ranging from 1–25 MW, primarily targeting hilly, North Eastern, and international border areas. This initiative seeks to leverage Rs. 15,000 crore in investment while promoting indigenous machinery and creating significant rural employment. **Key Points / Main Content** **Financial Provisions and Targets** * **Total Budget:** An outlay of Rs. 2584.60 crore is designated for the scheme’s duration. * **Capacity Goal:** The scheme targets the installation of approximately 1500 MW of Small Hydro Power. * **Investment Leverage:** The government outlay is expected to bring in a total investment of Rs. 15,000 crore to the sector. * **Detailed Project Reports (DPR):** Rs. 30 crore is allocated to support state and central agencies in preparing DPRs for approximately 200 future projects. **Central Financial Assistance (CFA) Structure** * **North Eastern and Border Districts:** Support is provided at Rs. 3.6 crore per MW or 30% of the project cost (whichever is lower), capped at Rs. 30 crore per project. * **Other States:** Support is provided at Rs. 2.4 crore per MW or 20% of the project cost (whichever is lower), capped at Rs. 20 crore per project. **Operational and Technical Requirements** * **Project Scope:** The scheme covers small hydro projects with a capacity between 1 MW and 25 MW. * **Indigenous Sourcing:** 100% of plant and machinery must be sourced from indigenous providers to fulfill 'Atmanirbhar Bharat' objectives. * **Infrastructure Efficiency:** Projects are decentralized, minimizing the need for long transmission lines and reducing transmission losses. **Socio-Economic and Environmental Benefits** * **Employment Generation:** The scheme is projected to create 51 lakh person days of employment during construction, alongside long-term operation and maintenance roles. * **Sustainability:** Projects are designed to avoid large-scale land acquisition, deforestation, and community displacement. * **Longevity:** SHP projects offer a long lifespan, typically ranging from 40 to over 60 years. **Impact Analysis** **State and Central Government Agencies** **Impact** Agencies will receive financial incentives to build a pipeline of small hydro projects through subsidized reporting and project preparation. **Action Required** Prepare Detailed Project Reports (DPRs) for the identified 200 projects to utilize the Rs. 30 crore incentive fund. **Hilly and North Eastern States (including Border Districts)** **Impact** These regions will receive higher tiers of financial assistance to exploit their high hydro potential in remote and difficult-to-reach locations. **Action Required** Identify and facilitate the development of project sites to tap into the specific CFA provisions for border and NE regions. **Indigenous Equipment Manufacturers** **Impact** The sector will see increased demand as the scheme mandates 100% indigenous sourcing for all plant and machinery. **Action Required** Scale up production and supply chains to meet the requirements for the targeted 1500 MW capacity. **Rural and Remote Communities** **Impact** Communities will benefit from socio-economic development, local investment, and significant employment opportunities (51 lakh person days). **Action Required** Provide the necessary local labor force for construction, maintenance, and operation of decentralized power units.

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