India's renewable energy sector pushes for reforms to unlock 500 GW target ahead of Union Budget 2026

India’s renewable energy industry has laid out a concentrated set of demands ahead of the Union Budget 2026, urging fiscal and regulatory measures to convert ambitious capacity targets into bankable projects and domestic manufacturing scale. The sector’s priorities span clarity on stalled contracts, targeted incentives for battery storage and equipment, stronger transmission spending and measures to lower financing costs , all designed to tackle intermittency and attract the capital needed for the energy transition.

A critical near‑term ask is resolution of delayed offtake agreements. Industry sources note that more than 45 GW of renewable capacity remained awaiting signed power purchase agreements and power sale agreements as of January 2026, a bottleneck they say is undermining investor and lender confidence. The budget, they argue, should offer an explicit timetable or commitment to expedite signing of those contracts to unlock equity and debt flows.

Manufacturing and technology self‑reliance are central themes. Industry groups want the government to prioritise domestic development of advanced solar technologies and to fold cell and module manufacturing equipment into production‑linked incentive (PLI) support, with wafer and ingot equipment phased in subsequently. According to a Grant Thornton pre‑budget analysis, India needs roughly 50 GW of new renewable capacity per year to hit a 500 GW target by 2030, and the transition will require roughly USD 1 trillion of investment over the next decade; policymakers and firms therefore see local equipment supply chains as essential to capture value and reduce import dependence.

Battery energy storage systems (BESS) are another top recommendation. The industry is seeking a dedicated PLI for BESS manufacturing, domestic treatment of balance‑of‑system components, and an Approved List of BESS Integrators modelled on existing lists for solar equipment to enforce quality and safety standards. Several commentators and reports have highlighted that stronger policy support for storage is critical to address renewable intermittency and to make capacity additions deliver usable, dispatchable power.

Transmission and grid readiness also feature prominently. Stakeholders welcome the greater focus on Green Energy Corridors but want larger budgetary allocations and faster on‑ground execution, together with streamlined state‑level procedures for grid connectivity and charging infrastructure so projects can begin exporting power immediately upon commissioning. Industry analysts contend that extending the Interstate Transmission System (ISTS) waiver beyond its 2025 expiry , potentially for several years , would further incentivise commercial and industrial procurement of interstate renewable power.

Cost of capital and tax measures remain pivotal. The sector is pushing for inclusion of renewables under Priority Sector Lending, reintroduction of concessional corporate tax rates for new manufacturing entities, and lower withholding tax regimes on external commercial borrowings and rupee bonds to reduce financing costs. Renewable developers estimate India will need in excess of USD 200 billion of investment by 2030 for clean energy objectives; easier and cheaper finance is therefore viewed as a lever to accelerate deployment. Calls have also been made to remove deemed dividend taxation on intra‑group loans and to exempt GST on corporate guarantees used by project special purpose vehicles.

On trade and duties, suggestions include lowering customs and GST burdens for key components: industry proposals seen by advisers urge a uniform 5% customs duty for BESS under the Project Import Scheme and standardising GST at 5% for wind and solar equipment to simplify compliance and reduce upfront costs. The extension of the Approved List of Models and Manufacturers (ALMM) for solar cells is also sought, reflecting that domestic cell production is still scaling up amid a supply‑demand mismatch.

Policy experts and executives have urged the budget to balance incentives for scale with measures that enhance long‑term competitiveness and system reliability. Dr Chetan Shah, Chairman and Managing Director of Solex Energy Limited, has advocated a shift from prioritising rapid capacity growth to ensuring sustainable competitiveness and resilience through calibrated fiscal support, viability gap funding and tax reforms.

Taken together, the industry’s package seeks to align industrial policy, grid investment and financial reforms so that India’s renewables expansion becomes both deliverable and domestically beneficial. With the finance ministry due to table the budget for 2026‑27, companies and investors will be watching closely for signals that New Delhi is prepared to greenlight manufacturing incentives, unstick contractual bottlenecks and reduce the cost barriers that currently constrain storage roll‑out and large‑scale project financing.