Union Budget 2026-27 — What Changed for Solar Energy in India
The Union Budget presented on February 1, 2026 gave a massive push to India's solar sector. Total renewable energy allocation increased 30% to ₹3.29 lakh crore, with solar getting the lion's share. Here's everything that changed and what it means for you.
Key Budget 2026 Solar Announcements
| Item | 2025 Allocation | 2026 Allocation | Change |
|---|---|---|---|
| Total Solar Sector | ₹2,42,240 crore | ₹3,05,390 crore | +26% |
| PM Surya Ghar | Not separately disclosed | ₹22,000 crore | Major increase |
| PM-KUSUM | ₹2,600 crore | ₹5,000 crore | +92% |
| Total Renewables | ₹2,53,190 crore | ₹3,29,147 crore | +30% |
Customs Duty Changes — Impact on Solar Prices
Good News — Duties Reduced
- Sodium Antimonate (raw material for solar glass): BCD reduced from 7.5% → Nil
- Solar modules: Effective duty reduced to 20% through rebalancing of BCD and cess
- Solar cell duties: Lowered via duty structure rebalancing
- Capital goods for lithium-ion (BESS) manufacturing: BCD exemptions extended
- Critical mineral processing equipment: BCD exempted
Watch Out — BCD Exemptions Expiring
- BCD exemptions for silicon used in un-diffused wafers will lapse from April 1, 2026
- This may slightly increase upstream manufacturing costs but impact on end consumer is minimal
What This Means for Solar Buyers
- Solar module prices expected to remain stable or decrease slightly as manufacturing input costs fall
- Battery storage (BESS) systems will become more affordable — extended capital goods exemptions reduce manufacturing cost
- Domestic manufacturing (PLI) gets stronger support — more Indian-made panels available
- PM Surya Ghar funding secured for 2026-27 — subsidy payments will continue without disruption
New Financial Infrastructure — Infrastructure Risk Guarantee Fund
Budget 2026 introduced a new Infrastructure Risk Guarantee Fund that provides partial credit guarantees to banks lending for large Battery Energy Storage System (BESS) projects. This makes grid-scale battery storage bankable — crucial for managing India's growing solar surplus during peak afternoon hours.
CCUS Fund — ₹20,000 Crore
Budget 2026 announced a ₹20,000 crore Carbon Capture, Utilization and Storage (CCUS) fund. While not directly solar-related, this signals India's long-term clean energy commitment and creates new opportunities for solar+storage projects.
What Budget 2026 Did NOT Do
- No new dedicated income tax deduction for individual solar buyers (existing provisions apply)
- Subsidy cap of ₹78,000 per household was not increased (CFA rate was increased in January 2026 separately)
- No change in GST rate on solar systems (remains at 5%)
Overall Impact on Solar Sector
Budget 2026 is strongly positive for India's solar sector:
- Record funding ensures scheme continuity through 2026-27
- Nearly doubled PM-KUSUM budget benefits 5 crore+ farmers
- Customs duty relief reduces system costs
- BESS support ensures grid can absorb more solar — removes a key scaling barrier
- India's solar sector grew 43% in 2025 (36.6 GW added) — Budget 2026 sustains this momentum