The Union Cabinet on Wednesday approved the 'Small Hydro Power (SHP) Development Scheme' for the period FY 2026-27 to FY 2030-31 with a total outlay of Rs 2,584.60 crore. The scheme targets the installation of approximately 1,500 MW of small hydro projects (1-25 MW capacity each) across the country, with special focus on hilly and North-Eastern states that hold high untapped potential.
The initiative emphasises environment-friendly "run-of-the-river" technology that generates power directly from the natural flow of rivers without large dams, minimising displacement, deforestation and ecological disruption.
Speaking on the approval, Union Minister Ashwini Vaishnaw said, "This run-of-the-river concept - without making a dam, without very big displacement or environmental issues - is based on the natural flow of the river to generate power. Around 7,000 sites have been identified across the country where run-of-the-river small hydropower can create up to 21,000 MW capacity."
He added that the technology is already successfully implemented in several countries: "Such projects run very well in many countries in the world, whether it is Brazil, Canada, Switzerland or Sweden. The cost is also very low - 4.5 to 5.5 rupees per unit - capital cost is less and the time to commission projects is shorter."
Highlighting the scheme's design, the minister noted, "Projects of 1 megawatt to 25 megawatt capacity will be made, and the total outlay is Rs 2,585 crore. We will learn to work in a new way... There are thousands of rivers and mountain streams in our country, especially with good flow during the monsoon. Once this industry develops, all these can be utilised. Turbines will be small, but we have to make very rugged, robust infrastructure so that work continues without constant maintenance."
Under the scheme, central financial assistance will be provided as follows:
In North-Eastern States and districts with international borders: Rs 3.6 crore per MW or 30% of project cost (whichever is lower), capped at Rs 30 crore per project.
In other states: Rs 2.4 crore per MW or 20 per cent of project cost (whichever is lower), capped at Rs 20 crore per project.
An amount of Rs 2,532 crore has been earmarked for project execution. The scheme is expected to attract Rs 15,000 crore in total investment, create 51 lakh 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 Rs 30 crore to prepare Detailed Project Reports for about 200 future projects, building a strong pipeline.
All plant and machinery will be sourced 100 per cent indigenously, aligning with the Atmanirbhar Bharat vision. Because SHP projects are decentralised, they require minimal long transmission lines, thereby reducing transmission losses.
The government described the scheme as a major step to rejuvenate the small hydro sector, tap remaining potential at a faster pace, and promote socio-economic development in remote regions. Project lifespans typically range from 40 to over 60 years, ensuring sustained clean energy and local economic benefits.
With today's approval, India moves closer to harnessing its vast small hydro potential in an environmentally sustainable and cost-effective manner.
