Union Budget 2026: Boosting Solar, Batteries, EVs, and Clean Energy Manufacturing in India

• Published
• By Anupam Nath

The Union Budget 2026-27, presented by Finance Minister Nirmala Sitharaman on February 1, 2026, marks a significant step forward in India's push toward sustainable energy, self-reliance in clean technology, and accelerated adoption of renewables. With a strong emphasis on reducing import dependence, lowering production costs, and supporting domestic manufacturing, the budget introduces targeted customs duty exemptions and incentives for key sectors like solar energy, battery storage, electric vehicles (EVs), and related ecosystems. These measures align with India's ambitious climate goals, including net-zero by 2070 and massive expansion in renewable capacity.

A major highlight is the support for solar power, particularly through the PM Surya Ghar Muft Bijli Yojana. The scheme, which provides free electricity via rooftop solar installations for households, has seen enhanced funding and visibility. Increased allocations ensure broader reach, helping millions of homes generate their own power, reduce electricity bills, and ease the load on the national grid. By promoting decentralized solar energy, the initiative fosters energy security at the grassroots level while creating jobs in installation, maintenance, and related services.

One of the most impactful announcements is the exemption of Basic Customs Duty (BCD) on the import of sodium antimonate, a critical raw material used in manufacturing solar glass. Previously taxed at 7.5%, this exemption directly lowers input costs for domestic solar module producers. Solar glass, essential for photovoltaic panels, becomes more affordable, improving the competitiveness of Indian manufacturers in the global market. This move corrects inverted duty structures and strengthens the entire solar value chain—from raw materials to finished modules—while supporting the National Manufacturing Mission for clean-tech sectors like solar cells and modules.

The budget also addresses battery storage, a vital component for integrating intermittent renewable sources into the grid. The extension of BCD exemptions on capital goods used for manufacturing lithium-ion cells has been broadened to include those for Battery Energy Storage Systems (BESS). Previously limited to mobility applications (like EVs), this now covers grid-scale storage, reducing capital expenditure (CAPEX) for large projects. Cheaper BESS will enable better management of solar and wind power fluctuations, ensuring stable supply and accelerating the shift to renewables. Industry experts note that this will attract investments in grid modernization and enhance energy security.

In the electric vehicle and e-mobility space, the budget provides continuity and targeted relief. Exemptions on capital goods for lithium-ion battery production, including additional items for EV batteries, help lower manufacturing costs. Full customs duty exemption on lithium-ion battery waste and scrap promotes a circular economy by encouraging domestic recycling and recovery of valuable materials like cobalt and lithium. This reduces reliance on imported virgin materials and supports sustainable practices. While some announcements focus more on storage than direct EV subsidies, the overall ecosystem benefits—cheaper batteries and components make EVs more affordable and viable for widespread adoption.

The budget's focus extends to critical minerals essential for batteries and clean tech. Exemptions on imports of cobalt powder, battery scrap, and other minerals like lead and zinc secure raw material supplies. Capital goods for processing these minerals domestically receive duty relief, building refining capacity and reducing vulnerability to global supply chain disruptions. These steps are crucial as India ramps up production of EVs, solar panels, and wind turbines.

In Uttar Pradesh (UP), these national measures are expected to provide a major boost. The state, already a hub for renewable energy projects, stands to gain significantly from incentives for rooftop solar installations, solar manufacturing units, grid-scale storage solutions, and e-mobility infrastructure. Lower costs for solar glass and batteries will encourage more investments in UP's industrial corridors, creating employment in green sectors and supporting the state's push toward sustainable development. Combined with schemes like PM Surya Ghar, UP could see accelerated deployment of rooftop solar in homes, schools, and businesses, alongside growth in EV charging networks and battery manufacturing facilities.

Overall, the Union Budget 2026 prioritizes pragmatic, supply-side reforms over flashy announcements. By rationalizing duties, extending exemptions, and promoting recycling, it lays a strong foundation for India's energy transition. These measures are projected to reduce costs across the clean energy value chain, attract foreign and domestic investments, and position India as a global leader in solar, battery, and EV manufacturing. As the country moves toward its renewable energy targets, such fiscal signals will play a pivotal role in achieving energy independence, lower carbon emissions, and economic growth driven by green innovation.

The budget's balanced approach—supporting both decentralized rooftop solar and large-scale grid solutions—ensures inclusive benefits. Households gain from affordable power, industries from cheaper inputs, and the environment from reduced fossil fuel dependence. With continued policy momentum, India's clean energy journey looks brighter than ever.