The ‘Small Hydro Power Development Scheme’, which was approved on 18 March, targets the installation of approximately 1500 MW of small hydro projects (plants with capacities of 1 to 25 MW each), for the period FY 2026-27 to FY 2030-31, with a special focus on hilly and northeastern states that hold high untapped potential.
The Government described the scheme as a major step towards harnessing its vast small hydro potential in an environmentally sustainable and cost-effective manner, and promote socio-economic development in remote regions. Project lifespans typically range from 40 to more than 60 years, ensuring sustainable clean energy and local economic benefits, it said. The scheme is expected to mobilize around INR 150 billion (US$ 1.61 billion) in total investment, create 5.1 million person-days of direct employment during construction, and generate long-term jobs in operation and maintenance in remote rural areas.
It will also support states and central agencies with INR 300 million (US$ 3.2 million) to prepare detailed project reports for about 200 future projects, with the aim of building a strong pipeline. All plant and machinery will be entirely sourced domestically, aligning with the Government’s Atmanirbhar Bharat vision. The initiative prioritizes run-of-the-river technology that generates power directly from the natural flow of rivers without large dams, minimizing displacement, deforestation and ecological disruption, Minister of Information Ashwini Vaishnaw said, while announcing the plan.
“This run-of- river concept, without major resettlement or environmental issues, is based on the natural flow of the river to generate power. Around 7000 sites have been identified across the country where small run-of-river hydropower can create up to 21 000 MW of capacity,” he said.
“The cost is very low, the capital cost is less and the time to commission projects is shorter. We will learn to work in a new way. There are thousands of rivers and mountain streams in our country, with good flow during the monsoon. All these can be utilized. Turbines will be small, but we have to make rugged, robust infrastructure so that work continues without constant maintenance,” he added. Under the scheme, central financial assistance of INR 3.6 crore per MW (US$385 640) or 30 per cent of the cost (whichever is lower), capped at INR 30 crore per project, will be provided for projects in northeastern states and districts with international borders. In all other states, support is set at INR 2.4 crore/MW (about US$ 260 000) or 20 per cent of the cost, with a cap of INR 20 crore per project
