The Union Cabinet has approved the Small Hydro Power (SHP) Development Scheme with a total outlay of ₹2,584.60 crore, aimed at boosting clean energy generation across India. The scheme, covering the period from FY 2026–27 to FY 2030–31, targets the installation of around 1,500 MW of small hydro power capacity through projects ranging between 1 MW and 25 MW. The initiative will particularly focus on hilly regions and North-Eastern states, where significant untapped hydro potential exists.

Union Minister Ashwini Vaishnaw highlighted that the scheme is built around environment-friendly “run-of-the-river” technology, which generates electricity using the natural flow of rivers without the need for large dams. This approach minimises displacement, reduces deforestation, and limits ecological disruption, making it a sustainable alternative to conventional hydroelectric projects. The government has identified nearly 7,000 potential sites across the country capable of generating up to 21,000 MW using this method.

The minister noted that such technologies are already successfully deployed in countries like Brazil, Canada, Switzerland, and Sweden, and are known for their cost efficiency and quicker implementation timelines. According to estimates, the cost of power generation through these projects ranges between ₹4.5 and ₹5.5 per unit, making it an economically viable solution. The smaller scale of turbines and infrastructure also ensures easier maintenance and adaptability to diverse terrains.

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Under the scheme, central financial assistance will be provided to support project development. For North-Eastern states and districts along international borders, assistance will be up to ₹3.6 crore per MW or 30% of the project cost, capped at ₹30 crore per project. In other states, the support will be up to ₹2.4 crore per MW or 20% of the project cost, with a maximum cap of ₹20 crore per project. Out of the total allocation, ₹2,532 crore has been earmarked specifically for project execution.

The initiative is expected to attract investments worth approximately ₹15,000 crore and generate around 51 lakh person-days of direct employment during the construction phase. Additionally, it will create long-term job opportunities in operations and maintenance, particularly benefiting remote and rural areas. The government has also allocated ₹30 crore to support the preparation of Detailed Project Reports for nearly 200 future projects, ensuring a steady pipeline for sector growth.

All equipment and machinery for the projects will be sourced domestically, aligning with the government’s push for self-reliance under the Atmanirbhar Bharat initiative. Due to their decentralised nature, small hydro projects require minimal transmission infrastructure, reducing energy losses and improving efficiency. The government has described the scheme as a significant step toward revitalising the small hydro sector, promoting sustainable energy, and driving socio-economic development in underserved regions.

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