The Indian government has implemented a series of environmentally friendly measures to achieve its 2070 net zero goal and accelerate progress toward it. Energy security is highlighted as a key focus in the budget. Finance Minister Nirmala Sitharaman noted that the government will introduce a policy document outlining the energy transition path, emphasizing employment, growth, and ecological sustainability.
The interim budget’s PM Surya Ghar Muft Bijli Yojana was also mentioned, with 1.28 crore registrations and 14 lakh applications received thus far. The government aims to further boost this initiative. To increase the proportion of renewable energy in the energy mix, a pumped storage policy will be introduced.
“Energy transition is crucial in combating climate change,” stated the finance minister. She proposed expanding the list of exempted capital goods used in manufacturing solar cells and panels domestically, while discontinuing customs duty exemptions for solar glass and tinned copper interconnect due to ample local production capacity.
Ishver Dholakiya, Managing Director and Founder of Goldi Solar, commented that exempting capital goods for solar manufacturing will cut costs and stimulate domestic production. He also praised the PM Surya Ghar Muft Bijli Yojana, which offers up to 300 units of free monthly electricity to one crore households, thereby promoting rooftop solar adoption.
The government’s focus on advancing nuclear energy through Bharat Small Reactors and modular technologies signifies a strategic diversification of the energy mix with reliable, low-carbon options. Support for Advanced Ultra Super Critical (AUSC) thermal power plants underscores efforts to enhance efficiency and reduce emissions from thermal power generation.
Regarding “hard to abate” industries’ contribution to climate change, the government proposes transitioning from energy efficiency targets to emission targets, shifting from the current “Perform, Achieve, and Trade” mechanism to an “Indian Carbon Market.”
Zerin Osho, Director of the India programme at the Institute for Governance & Sustainable Development (IGSD), highlighted that carbon markets could incentivize greenhouse gas reductions by offering financial rewards. India plans to launch its own ‘India Carbon Market’ (ICM) in 2026 to further incentivize climate action and mitigate related costs.
To reinforce India’s climate commitments and green transition, the government plans to introduce a climate finance taxonomy, aiming to mobilize capital for climate adaptation and mitigation.
Arunabha Ghosh, CEO of the Council on Energy, Environment and Water, welcomed the proposal to define climate finance, seeing it as a positive step towards funding sustainability initiatives. He believes these measures can lay a solid foundation for a sustainable and prosperous India.
Vaibhav Pratap Singh, Executive Director of Climate and Sustainability Initiative, also praised the proposed climate finance taxonomy, noting its potential to align financial flows with India’s net zero targets and enhance investment in climate adaptation and mitigation.
Customs duties on 25 critical minerals essential for sectors like nuclear and renewable energy have been fully exempted to support their processing, refining, and availability in India.
Regarding electric vehicles (EVs), there was no specific announcement in the budget. Amit Bhatt, India Managing Director at ICCT, mentioned that while this was expected, the Minister of Heavy Industries indicated an announcement on EVs and FAME 3 is forthcoming.
Rajeev Chaba, CEO Emeritus of JSW MG Motor India Pvt. Ltd, welcomed the decision to waive import duties on critical minerals such as lithium, copper, and cobalt, noting it as a positive step for the EV industry. This move is expected to reduce battery manufacturing costs, make EVs more affordable, and promote local production of lithium-ion batteries, thereby supporting the sector’s growth in India.
