Can Budget 2026 Deliver What the Renewable and Energy Sectors Want?

As the Union Budget 2026 gets closer, the energy sector players are outlining a list of demands that are aimed at synchronising the government’s financial policy with the changing Indian energy scenario.

This includes demanding the extension of the production-linked incentive (PLI) coverage to solar value chains, a Goods and Services Tax (GST) waiver for storage systems, and streamlining duties to minimise imports. It is believed manufacturing polysilicon, wafers, and ingots that are vital to the production of solar modules and downstream clean technologies could become lucrative with these measures.

At the same time, the oil and gas industry is requesting modifications to the tax, GST, and cess regimes to support domestic exploration, reduce fuel prices, and attract upstream investment. This is particularly important as India is trying to reduce its reliance on imported crude, which currently meets over 80% of its demand.

The situation around India’s energy self-sufficiency goal and sustainable growth brings one important question to the surface. Will Budget 2026 meet the requirements of both the renewables and fossil fuel industries by offering a mix of long-term structural reforms and short-term fiscal incentives?

What Are the Main Budget Demands from the Renewable Sector?

Industry leaders from the renewable sector argue that India’s clean energy push needs more than headline capacity additions. They want the next budget to focus on deeper manufacturing and storage capabilities, not just deployment targets. Renewable energy companies are pushing for a PLI expansion to cover upstream solar manufacturing components such as polysilicon, ingots and wafers, which would help reduce import dependence and build a more integrated domestic supply chain.

Another priority is the government’s simplification process of GST on battery energy storage systems (BESS). These are very important for providing a stable electricity supply and for using renewable energy sources. The producers and other stakeholders are seeking the scrapping of taxes on capital goods, making financing easier for both rooftop and distributed solar, and continuing or enlarging the PM-KUSUM solar schemes to boost adoption.

These requests are part of a larger strategy that emphasises moving from simply increasing capacity to reducing costs, securing long-term investments, and gaining support for the federal budget.

What Is the Oil and Gas Industry Seeking in Budget 2026?

The oil and gas industry has been very vocal in expressing its demands, among them proper fiscal and tax reforms that would strengthen local production and affordability. Industry players are demanding that the same taxes and duties be applied to crude oil imported through pipelines as to local sourcing, and thus that these taxes and duties be completely removed or at least reduced.

The industry is calling for a reassessment of the production cess on older exploration blocks, or its total removal, which they feel would make the project more viable and lead to an increase in domestic oil output. In a broader sense, pre-budget analysis suggests that the Union Budget may present a strategic plan for the oil and gas industry, comprising measures to increase local exploration activity, expand the refining sector, and develop the petrochemical sector, all to ensure energy security and independence.

These demands illustrate how fiscal measures could influence the economics of India's energy sectors in the short run and their competitiveness in the long run.

Could These Budgetary Demands Influence Policy Outcomes?

The renewable energy and oil and gas industries are advocating for distinct priorities, though there is some overlap. The first is mainly concerned with import substitution, manufacturing scale-up, and reductions in transaction costs, while the second demands tax clarity, fiscal relief, and incentives to attract domestic exploration and infrastructure development.

Policymakers would have to consider the broader macroeconomic priorities, such as fiscal consolidation, infrastructure spending, and climate goals, before the Viksit Bharat 2047 vision, while the Union Budget 2026 is presumed to be presented on February 1, 2026.

The question is: will Budget 2026 deliver the targeted measures that provide short-term relief and long-term clarity for India’s clean energy and fossil fuel sectors?

Sources:

Economic Times
Money Control
Rediff Money
Economic Times