Budget 2026: Solar Sector Shines with Rs 28,000 Crore Boost

A Landmark Budget for India's Solar Ambitions

The Union Budget 2026 has delivered a significant boost to India's renewable energy landscape, earmarking approximately Rs 28,775 crore for the solar power sector. This substantial financial commitment underscores the government's strategy to enhance energy security, promote household energy autonomy, and strengthen domestic manufacturing capabilities. The budget's provisions are set to create a positive ripple effect across the entire solar value chain, from raw material suppliers to end consumers.

Powering Homes with the PM Surya Ghar Yojana

The centerpiece of the budget's solar initiative is the massive Rs 22,000 crore allocation for the PM Surya Ghar Muft Bijli Yojana. This flagship scheme aims to install rooftop solar systems for one crore households, providing them with up to 300 units of free electricity per month. This move is a direct stimulus for the residential rooftop solar market, which is expected to see a surge in demand. Companies involved in manufacturing solar modules, inverters, and mounting structures, as well as engineering, procurement, and construction (EPC) firms specializing in rooftop installations, are poised to be major beneficiaries.

Energizing Agriculture through PM-KUSUM

To bolster energy security for the nation's farmers, the budget has allocated Rs 5,000 crore to the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM). This scheme facilitates the installation of solar-powered agricultural pumps and supports farmers in setting up grid-connected solar power plants on their land. The allocation will accelerate the replacement of diesel pumps, reducing both carbon emissions and the operational costs for farmers. This provides a direct opportunity for manufacturers of solar water pumps and developers focused on decentralized solar projects in rural areas.

Strengthening the Grid and Domestic Manufacturing

Further reinforcing the solar ecosystem, the budget has set aside Rs 1,775 crore for grid-connected solar power projects. This funding will support the development of large-scale solar parks and enhance the transmission infrastructure required to evacuate power efficiently.

In a significant move to support the 'Aatmanirbhar Bharat' (Self-reliant India) initiative, the budget has introduced crucial customs duty reforms. The basic customs duty on sodium antimonate, a vital raw material for manufacturing solar glass, has been reduced from 7.5% to nil. This measure will lower production costs for domestic solar glass manufacturers, making them more competitive against imports and strengthening the local supply chain.

Key Solar Sector Allocations in Budget 2026

Policy Stability for Component Producers

While certain customs duty exemptions on silicon used in solar cells are scheduled to expire in April 2026, the government has provided clarity by maintaining the effective duty rates. This decision ensures a stable and predictable policy environment for domestic manufacturers of silicon wafers and solar modules, encouraging continued investment in capacity expansion without the uncertainty of sudden tariff changes.

Long-Term Vision: Fostering Research and Innovation

Beyond immediate commercial applications, the budget also signals a commitment to long-term scientific advancement in the solar domain. The plan to establish or upgrade the National Large Solar Telescope is part of a broader vision to position India as a global leader in astrophysics and solar research. This investment in high-tech observational facilities will foster innovation and help develop a skilled workforce for the future of solar technology.

Market and Investor Outlook

The comprehensive support announced in Union Budget 2026 is expected to significantly boost investor confidence in India's solar sector. The clear focus on demand generation through large-scale government schemes, coupled with supply-side support via manufacturing incentives, creates a robust framework for growth. Companies across the solar ecosystem, including Adani Green Energy, Tata Power Solar, Waaree Energies, and Borosil Renewables, are likely to experience positive momentum. The budget's measures are aligned with India's long-term goal of achieving 500 GW of non-fossil fuel capacity by 2030, making the solar sector a key driver of the country's green energy transition.