**Executive Summary**
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 Rs. 2584.60 crore. The scheme aims to install approximately 1500 MW of capacity through projects ranging from 1-25 MW, focusing on hilly and North Eastern regions. Key objectives include attracting Rs. 15,000 crore in investment, promoting indigenous manufacturing, and generating significant rural employment.
**Key Points / Main Content**
**Financial Provisions and Targets**
* **Total Outlay:** Rs. 2,584.60 crore allocated for the five-year period ending in FY 2030-31.
* **Capacity Goal:** Target installation of approximately 1500 MW of small hydro power.
* **Project Scope:** Support is restricted to small hydro projects with a capacity between 1-25 MW.
* **Investment Leverage:** The scheme is expected to mobilize approximately Rs. 15,000 crore in total investment.
**Central Financial Assistance (CFA) Structure**
* **North Eastern States and Border Districts:** Financial assistance is set at Rs. 3.6 crore per MW or 30% of the project cost (whichever is lower), with a maximum cap of Rs. 30 crore per project.
* **Other States:** Assistance is set at Rs. 2.4 crore per MW or 20% of the project cost (whichever is lower), with a maximum cap of Rs. 20 crore per project.
**Project Development and Preparation**
* **DPR Incentives:** Rs. 30 crore is earmarked to support state and central agencies in preparing Detailed Project Reports (DPRs) for approximately 200 future projects.
* **Indigenous Sourcing:** 100% of plant and machinery must be sourced from indigenous providers to support the "Atmanirbhar Bharat" initiative.
**Sustainability and Socio-Economic Impact**
* **Employment Generation:** The scheme is projected to create 51 lakh person-days of employment during construction, plus ongoing roles in operation and maintenance.
* **Environmental Benefits:** Projects are designed to avoid large-scale land acquisition, deforestation, and community displacement.
* **Infrastructure Efficiency:** Decentralized SHP projects reduce the need for long transmission lines and minimize transmission losses.
* **Longevity:** Project lifespans are estimated to range from 40 to over 60 years.
**Impact Analysis**
**State and Central Government Agencies**
**Impact:**
Agencies are incentivized to expand the pipeline of renewable energy projects through dedicated funding for preparatory work.
**Action Required:**
Develop and submit Detailed Project Reports (DPRs) for approximately 200 projects to access the Rs. 30 crore support fund.
**Project Developers and Investors**
**Impact:**
Developers receive significant capital subsidies (CFA), making remote and difficult locations more economically viable for investment.
**Action Required:**
Identify project sites between 1-25 MW capacity and ensure all plant and machinery are procured from 100% indigenous sources.
**Domestic Manufacturers**
**Impact:**
The requirement for 100% indigenous plant and machinery creates a guaranteed market for domestic renewable energy equipment manufacturers.
**Action Required:**
Supply plant and machinery that meet the technical requirements of small hydro power projects.
**Remote and Hilly Communities**
**Impact:**
These regions will see improved socio-economic development, increased local investment, and the creation of long-term employment opportunities.
**Action Required:**
Provide the local labor force for the 51 lakh person-days of construction work and subsequent maintenance and operation roles.
Key Entities Referenced
Small Hydro Power (SHP) Development Scheme (FY 2026-27 to FY 2030-31): A government scheme with a ₹2584.60 crore outlay aimed at installing 1500 MW of small hydro projects (1-25 MW capacity).
Ministry of New and Renewable Energy: The primary ministry responsible for the oversight and implementation of the Small Hydro Power development initiatives.
Hilly and North Eastern States: Target regions prioritized for higher central financial assistance (up to 30% of project cost) due to their high small hydro potential.
Atmanirbhar Bharat: A national initiative referenced as the basis for the scheme's requirement to leverage 100% plant and machinery from indigenous sources.
Ministry of New and Renewable Energy
Cabinet approves scheme on ‘Small Hydro
Power (SHP) Development Scheme for the period
FY 2026-27 to FY 2030-31’
Posted On: 18 MAR 2026 4:17PM by PIB Delhi
The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the ‘Small Hydro
Power (SHP) Development Scheme for the period FY 2026-27 to FY 2030-31’ with an outlay of
Rs.2584.60 crore for installation of Small Hydro Power (SHP) Projects of an approximate capacity of
1500 MW.
The scheme will support small hydro projects (between 1-25 MW capacity) to come up in different states
and will especially benefit hilly and North Eastern states with high potential for such projects. In North
Eastern States and in districts with international border, central financial assistance to the tune of Rs.3.6
crore per MW or 30%of the project cost, whichever is lower with an upper limit of Rs.30 crore per project
will be available. In other states Rs.2.4 crore per MW or 20% of project cost, whichever is lower with a
cap of Rs.20 crore per project would be available. This will help in tapping the small hydro potential in
remote and difficult to reach locations. An amount of Rs. 2,532 crore has been earmarked for such
projects. This is likely to bring in Rs. 15,000 crore of investment in the small hydro sector giving a boost
to the clean energy initiative, investment in remote and rural areas and creating significant employment
opportunities. The investment will also leverage 100% of the plant and machinery from indigenous
sources fulfilling the objective of Atmanirbhar Bharat.
The scheme will also incentivise the states to prepare the detailed project report for about 200 projects to
create a pipeline of small hydro projects in future. An amount of Rs.30 crore has been kept to support
state and central government agencies to prepare such DPR.
The scheme will support 51 lakh person days of employment during the project construction and will also
enable employment in maintenance and operation of these SHPs which will come up in largely rural and
remote locations. SHP projects being decentralized in nature, the requirement of long transmission line is
minimal, which also reduces the transmission losses.
Launching of this Scheme will rejuvenate the Small Hydro Power sector and will help in exploiting the
available potential at a much faster pace. SHP projects are environmentally sustainable, as they avoid
large-scale land acquisition, deforestation, and displacement of communities. It will also promote socio-
economic development of remote areas by boosting local investment, apart from creating long-term
employment with project lifespans typically ranging from 40 to over 60 years.
****
MJPS
(Release ID: 2241812) Visitor Counter : 262
Read this release in: Urdu , Marathi , ही , Punjabi , Gujarati