The Union Cabinet, chaired by Prime Minister Shri Narendra Modi, has approved the Small Hydro Power (SHP) Development Scheme for FY 2026–27 to FY 2030–31, with an outlay of Rs 25.85 billion to support installation of around 1,500 MW capacity.

The scheme targets projects of 1–25 MW across states, with a focus on hilly and North Eastern regions. Central financial assistance of Rs 36 million per MW or 30 per cent of project cost (capped at Rs 300 million per project) will be provided for North Eastern and border districts. For other states, support will be Rs 24 million per MW or 20 per cent of project cost, with a cap of Rs 200 million per project. Around Rs 25.32 billion has been earmarked for project support.

The initiative is expected to catalyse investments of about Rs 150 billion, boost clean energy deployment and promote indigenous manufacturing of plant and machinery.

An additional Rs 300 million has been allocated to support preparation of detailed project reports for around 200 projects. The scheme is expected to generate 5.1 million person-days of employment during construction and create long-term operational jobs.

By enabling decentralised energy generation, the scheme will reduce transmission losses while supporting sustainable development in remote and rural regions.