New Delhi, April 26 With an outlay of Rs 2,584.60 crore aimed at adding 1,500 MW of new capacity, the Small Hydro Power Development Scheme (2026-31) prioritises reliable, decentralised power generation, especially in challenging terrains where other renewable sources face limitations, an official fact-sheet said on Sunday.
The small hydro power (SHP) scheme marks a decisive policy intervention by the government to harness the unique strengths of small hydropower in the country’s clean energy journey.
India possesses a significant SHP potential of 21,133.61 MW across 7,133 identified sites.
As of early 2026, approximately 5,171 MW (around 24.5 per cent) has already been harnessed, demonstrating steady progress.
The remaining over 15,960 MW represents a substantial opportunity for accelerated development through focused policy support and public-private collaboration, said the official statement.
Recognising this strategic importance, the Union Cabinet has approved the scheme that will support small hydro projects (between 1-25 MW capacity) to come up in different states.
The scheme will especially benefit hilly and northeastern states with high potential for such projects.
The scheme aims to unlock approximately 1,500 MW of new SHP capacity, with a strong focus on hilly regions and the North Eastern States rich in untapped small hydro potential and often constrained by energy access challenges.
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The scheme is expected to attract investments of around Rs 15,000 crore in the small hydro sector. It will also promote the use of indigenous plant and machinery, contributing to the vision of Atmanirbhar Bharat while boosting local manufacturing and supply chains.
To ensure long-term sector growth, the scheme provides support for the preparation of Detailed Project Reports (DPRs) for a minimum of 200 projects.
An allocation of Rs 30 crore has been made separately to assist central and state agencies in developing a strong future project pipeline.
“SHP is emerging as a vital and reliable component of India’s clean energy transition. It is particularly well-suited for hilly, remote, and difficult terrains where decentralised generation can deliver sustainable power, enhance energy access, and support local livelihoods,” said the statement.
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