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 aims to install approximately 1,500 MW of small hydro capacity across the country, reinforcing India’s clean energy ambitions.
The initiative targets projects in the 1–25 MW range, with a clear focus on decentralised renewable energy development, particularly in remote and difficult terrains.
Higher Incentives For Northeast, Border Regions
To accelerate adoption in strategically important and resource-rich regions, the government has structured differentiated financial support. Accordingly, North Eastern and border districts will get upto ₹3.6 crore per MW or 30% of project cost (whichever is lower), capped at ₹30 crore per project. Other states will be granted upto ₹2.4 crore per MW or 20% of project cost (whichever is lower), capped at ₹20 crore per project
A significant ₹2,532 crore has been earmarked specifically for project implementation, underscoring the scale of the push.
₹15,000 Crore Investment Multiplier Expected
The scheme is expected to catalyse ₹15,000 crore in total investments in the small hydro sector, acting as a strong multiplier for rural infrastructure development, private sector participation and clean energy deployment.
Importantly, the programme mandates 100% indigenous sourcing of plant and machinery, aligning with the government’s Atmanirbhar Bharat vision.
Pipeline Creation Through DPR Support
To ensure sustained sector growth, the government has also allocated ₹30 crore to support preparation of detailed project reports (DPRs) for nearly 200 upcoming projects.
This forward-looking approach aims to create a robust pipeline of bankable SHP projects, enabling faster execution in the coming years.
Employment Boost: 51 Lakh Person Days
The scheme is expected to generate approximately 51 lakh person-days of employment during the construction phase alone. Additional long-term jobs will be created in operations, maintenance and local ecosystem services
Given that most SHP projects are located in rural and remote areas, the employment impact is expected to directly benefit local communities.
Low-Impact, High-Value Renewable Solution
Small hydro projects offer several structural advantages as these have minimal land acquisition requirements, limited environmental disruption, reduced need for long transmission lines and lower transmission losses.
With project life spans typically ranging from 40 to 60 years, SHPs provide long-term, stable clean energy generation.
Driving Inclusive Growth Through Green Energy
The scheme is expected to rejuvenate India’s small hydro sector, unlocking untapped potential while promoting socio-economic development in remote regions, sustainable infrastructure and distributed energy systems.
By combining policy support, financial incentives, and localised impact, the initiative marks a significant step in India’s transition toward a resilient and inclusive clean energy ecosystem.