Adani Power & Budget 2026: SEZ Relief and Financing Reforms Fuel Growth

Introduction: A Budget of Targeted Reforms

Union Budget 2026, presented by Finance Minister Nirmala Sitharaman, charts a course of continued fiscal discipline while providing targeted support to key economic sectors. For the power industry, and specifically for a major player like Adani Power Ltd., the budget introduces significant policy measures concerning Special Economic Zones (SEZs), the financing ecosystem, and the transition towards cleaner energy. These announcements are set to directly impact Adani Power's operational profitability, access to capital for its ambitious expansion, and its long-term strategic direction.

Major Relief for SEZ Operations

The most significant announcement for Adani Power is a special one-time measure to facilitate sales from manufacturing units in SEZs to the Domestic Tariff Area (DTA) at a concessional rate of 2%. This move directly addresses a long-standing and contentious issue for the company, particularly concerning its large thermal power plant in the Mundra SEZ.

For years, the levy of duties on power supplied from SEZs to the DTA has been a subject of legal disputes, culminating in a Supreme Court ruling in early 2026 that struck down customs duty on such supplies. The budget's proposal provides a clear, albeit one-time, policy framework that resolves ambiguity. For Adani Power, this measure could unlock significant value by allowing its Mundra plant to sell power to the domestic market more competitively, improving plant utilization and resolving a major operational and financial overhang.

Restructuring the Power Financing Landscape

Recognizing the critical need for capital in the power sector, the Finance Minister proposed a restructuring of the Power Finance Corporation (PFC) and the Rural Electrification Corporation (REC). These institutions are the primary lenders for power projects in India. A comprehensive review and restructuring aim to enhance their scale and efficiency.

For Adani Power, which is pursuing an aggressive capacity expansion to 42 GW by 2031-32, this is a crucial development. A more robust and efficient financing mechanism could lead to improved access to capital and potentially lower financing costs for its upcoming brownfield and greenfield projects. This reform, coupled with proposals to deepen the corporate bond market, strengthens the financial avenues available to fund the company's large-scale capital expenditure.

A Push Towards Cleaner Thermal Power

In a nod to environmental sustainability, the budget announced a significant outlay of ₹20,000 crore over the next five years for Carbon Capture, Utilization, and Storage (CCUS) technologies. The scheme specifically targets high-emission sectors, including power, steel, and cement.

As India's largest private thermal power producer, Adani Power operates a substantial fleet of coal-based plants. This dedicated fund provides a clear financial incentive and a strategic pathway for the company to invest in technologies that can reduce the carbon footprint of its existing and future thermal assets. It allows Adani Power to align with global ESG trends and national climate goals without immediately abandoning its core thermal generation capacity, which remains vital for India's energy security.

Broader Tailwinds from Infrastructure and Logistics

The budget's continued emphasis on public infrastructure, with a proposed capital expenditure increase to ₹12.2 lakh crore, acts as a powerful macroeconomic tailwind. Sustained economic growth driven by infrastructure development translates directly into higher demand for electricity, benefiting large generators like Adani Power.

Furthermore, proposals to establish new dedicated freight corridors and operationalize new national waterways will enhance coal logistics. For a company heavily reliant on coal, a more efficient and cost-effective supply chain can lead to improved operational margins and greater reliability.

Investor and Market Outlook

The market is likely to view the budget's provisions for the power sector favorably. The resolution of the SEZ issue is a clear and immediate positive for Adani Power, removing uncertainty and potentially leading to an earnings upgrade. The restructuring of PFC and REC, while subject to implementation details, signals the government's intent to ensure a smooth flow of capital for the sector's growth.

The CCUS fund is a forward-looking measure that positions thermal power players for a more sustainable future. Overall, the budget reinforces the government's focus on strengthening India's energy infrastructure, a positive signal for long-term investors in the sector.

Conclusion

Union Budget 2026 delivers a multi-pronged boost to Adani Power. It provides an immediate operational and financial advantage through the SEZ sales policy, strengthens the long-term financing ecosystem crucial for its growth, and offers a strategic framework for navigating the energy transition. By addressing key sector-specific challenges and maintaining a strong focus on infrastructure-led growth, the budget has created a supportive policy environment for Adani Power to execute its expansion plans and solidify its leadership position in India's power market.