Union Budget 2025: Impact on Green Energy Sector

India, a rapidly growing economy and one of the world’s most populous nations, faces an undeniable challenge when it comes to its energy needs. The country has long relied on fossil fuels, with coal being the dominant energy source. However, as India’s environmental challenges grow, especially due to high pollution levels and the risks posed by climate change, the government is making substantial efforts to shift towards greener energy solutions.

In this blog post, we’ll look at India’s growing green energy landscape, government initiatives, and the key points from the 2025 Union Budget as it relates to climate action, energy transition, and sustainability. India’s Union Budget 2025 has brought forth several announcements that highlight the country's commitment to a green, low-carbon future. As the country sets its sights on becoming a global leader in clean energy, the budget outlines ambitious targets and measures designed to accelerate the adoption of new and renewable energy technologies, support the transition to electric vehicles (EVs), and secure critical resources for the green energy economy.

1. India’s Green Energy Landscape

The Union Budget for 2025 outlined key measures to bolster India’s green energy transition, but the focus was still largely on energy security. In the context of India’s climate action, the budget demonstrated a commitment to renewable energy and energy efficiency, but also highlighted some key gaps in addressing broader environmental concerns.

• Nuclear Energy: One of the most significant announcements was the allocation of INR 20,000 crore to nuclear energy, with a target of achieving 100 GW capacity by 2047, a 15-fold increase from the current 6.7 GW. The government plans to bring in private sector participation through amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act.

  
  

• Solar Energy: Rooftop solar received a boost, with an allocation of INR 20,000 crore under the PM Surya Ghar Muft Bijli Yojana, an 80% increase from the previous year. India is also supporting the domestic manufacturing of solar panels and grid-scale batteries under its National Manufacturing Mission to encourage the “Make in India” initiative.

  
  

• Electric Vehicles (EVs): The budget has introduced measures to support the domestic manufacturing of electric vehicles, including reductions in import duties on battery equipment and critical minerals for EV batteries. There’s also a focus on expanding the deployment of electric buses with a boost to the PM e-bus SEWA and PM E-DRIVE schemes, which will enhance public transportation through electric mobility.

2. Biodiversity Conservation and Air Quality

   
   

The budget also fails to address pressing issues like biodiversity conservation and air quality management. Despite India’s rich biodiversity, there was no significant mention of initiatives for habitat protection or restoration of ecologically sensitive areas. Similarly, the air quality problem, particularly in northern cities like Delhi, continues to be a public health issue, yet the budget allocates only a modest increase in funding for the Commission for Air Quality Management (CAQM).

The air quality issue was also highlighted around social media after Bryan Johnson, the anti-ageing influencer abruptly walked out of Nikhil Kamath's podcast recently. He also tweeted saying, "Indians, organize yourselves and take action. You will do more to improve India’s health by cleaning up the air than by curing cancer."

3. What’s Missing from the Budget: Broader Climate Action

While the 2025 budget provides some notable allocations for green energy initiatives, the document was criticized for its limited focus on the full spectrum of climate action. As brilliantly highlighted in this Sunny Climate, Stormy Climate blog post, the budget fails to adequately address areas such as climate-resilient agriculture, water scarcity, biodiversity conservation, and adaptation to climate change.

Agriculture and Climate Change

Agriculture is highly vulnerable to the impacts of climate change, with extreme weather events and changing rainfall patterns threatening crop yields. The budget only briefly touched on climate-resilient seeds under the National Mission on High-Yielding Seeds, but it missed broader climate adaptation measures, such as:

• Agroecology and natural farming practices

• Protection against extreme weather events for farmers

• Management of agricultural waste and crop burning

• Ensuring water sustainability for farming, especially in drought-prone areas

  
  

Water Scarcity and Sustainability

Water scarcity is a pressing issue in India, with some regions already facing significant water stress. The Jal Jeevan Mission, which aims to provide a drinking water connection to every rural household, received a substantial allocation of INR 68,000 crore. However, the budget did not adequately address the underlying issue of water sustainability. Critical gaps include:

• Long-term water source sustainability (e.g., aquifer mapping, groundwater recharge)

• Recycling of wastewater and secondary use

• Demand-side interventions to reduce water consumption, particularly in urban areas

Conclusion: Union Budget 2025 as a Mixed Bag of Impact for India’s Green Energy Sector

India’s green energy journey is in full swing, with increased investments in solar, wind, nuclear, and electric vehicles. The government is making strides in ensuring a more sustainable energy future. However, the 2025 Union Budget has not done enough impact to ensure that climate action is integrated across the green energy sectors. The absence of strong measures for adaptation, water security, biodiversity conservation, and industrial decarbonization leaves significant gaps in the country’s climate strategy.

While the budget signals commitment to energy security and a clean energy transition, it must go beyond isolated projects and focus on the broader climate crisis. The road to Viksit Bharat (Developed India) requires a more comprehensive approach to climate action—one that includes sustainable practices across agriculture, water management, air quality, and the built environment.

India is at a crossroads. By fully integrating climate action across all sectors, we can build a future that is not only energy-secure but also climate-resilient and sustainable. For now, we must continue to push for the government to strengthen its climate action strategies and fill the gaps that still remain.

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