Budget 2026 wishlist: From renewables to critical minerals, 5 key sectors in focus

With Budget 2026 on the horizon, corporate India is zeroing in on targeted policy support for renewables, nuclear energy, grid-scale storage, deep tech, power sector reforms, and critical minerals. The ask list spans tax relief, GST rationalisation, simpler compliance, and fresh momentum for Make in India.

Beyond sustaining consumption and demand revival, the street is looking for clarity on incentives for strategic sectors. In Budget 2025, defence received Rs 4,91,732 crore, IT and telecom Rs 81,174 crore, and energy Rs 65,553 crore. The government flagged power, mining, and financial services among the key domains to scale India’s growth and competitiveness. Industry advisors have since outlined steps to sharpen tax efficiency, ease administrative burdens, and unlock private capital in infrastructure-heavy, long-gestation sectors.

Renewables: Enable group tax consolidation

Renewable energy assets are often housed in multiple special purpose vehicles (SPVs), creating tax leakages and cash flow frictions. Industry recommendations include a group tax consolidation regime that allows wholly owned or majority-owned entities within a renewable energy group (including trusts and collaborative structures) to be assessed as a single tax unit.

• Consolidated filings with cross-entity loss set-offs and exclusion of intra-group transactions for tax computation.
• Lower effective tax rates, better utilisation of depreciation and losses, and reduced double taxation.
• Smoother capital allocation and materially lower compliance costs, aligning India with global best practices.

Nuclear energy: Targeted tax incentives and faster approvals

As India leans on clean baseload power, the nuclear ecosystem—especially startups and manufacturers—seeks bespoke tax support to tackle high capex and long project timelines.

• Accelerated depreciation and R&D-linked tax credits for nuclear technology development and localisation.
• Easier access to Section 80-IAC benefits for DPIIT-recognised nuclear startups through a streamlined approval pathway.

Policy milestones announced earlier include a goal of at least 100 GW of nuclear capacity by 2047, proposed amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act to enable greater private participation, and a Nuclear Energy Mission focused on Small Modular Reactors (SMRs) with an outlay of about Rs 20,000 crore. The plan envisages operationalising at least five indigenously developed SMRs by 2033.

Battery energy storage systems (BESS): Tax clarity and GST rationalisation

Large-scale storage is pivotal for integrating renewables into the grid. The sector’s wish list targets both direct tax and indirect tax relief to improve project bankability.

• Extend Section 35AD to BESS, allowing full deduction of qualifying capital expenditure for grid-scale projects.
• Amend Section 79 to safeguard carry-forward of losses during shareholding changes, transfers to InvITs, or refinancing-driven restructurings, providing certainty for investors.
• Reduce GST on lithium-ion batteries used in grid-scale BESS from the prevailing 18% to 5% to lower upfront costs, ease working capital pressures, and accelerate deployment.

Technology and deep tech: Scale up R&D and startup support

Technology enablement remains central to manufacturing competitiveness. In the previous budget cycle, the government earmarked Rs 20,000 crore for private-sector-led R&D to catalyse industry-driven innovation and global product creation. A Deep Tech Fund of Funds was also announced to back startups in AI, semiconductors, robotics, and other frontier technologies.

• A dedicated Centre of Excellence in AI for education with an outlay of Rs 500 crore aims to build applied capabilities.
• Support for the startup ecosystem includes a Rs 10,000 crore Fund of Funds and enhanced credit guarantees.

For Budget 2026, industry expects continuity: faster disbursal mechanisms, outcomes-linked funding, and smoother compliance for IP-heavy projects.

Power sector: Keep reform incentives flowing

To revive distribution health and increase transmission capacity, the Centre has incentivised state-level reforms and intra-state grid augmentation. States have been allowed an additional 0.5% of GSDP borrowing conditional on progress in power reforms. Stakeholders now look for:

• Extended and clearer timelines on reform-linked borrowings for states meeting distribution loss and billing efficiency targets.
• Support for smart metering, network modernisation, and renewable integration to reduce technical and commercial losses.
• Stable policy for ancillary services and energy markets to improve grid reliability and attract private investments.

Critical minerals: De-risk supply chains and boost processing

Supply disruptions earlier highlighted the need to secure critical minerals for batteries, electronics, defence, and clean energy manufacturing. The government previously proposed full exemptions for cobalt powder and waste/scrap of lithium-ion batteries, lead, zinc, and a set of other critical minerals to ensure domestic availability and job creation.

Additionally, in 2024, basic customs duty was removed on 25 critical minerals not available domestically (and two others), supporting domestic processing—especially by MSMEs. Heading into Budget 2026, industry seeks:

• Continuation and expansion of duty relief where domestic supply gaps persist.
• Production-linked incentives for refining and processing to build a resilient midstream.
• Fast-tracked exploration and permitting, with ESG-aligned frameworks to attract investment.

What to watch in Budget 2026

• Whether group tax consolidation is introduced for renewable energy SPVs.
• Specific tax and R&D incentives for nuclear startups and manufacturers.
• Direct tax clarity and a GST cut for grid-scale BESS to 5%.
• Deeper, outcome-based R&D funding and smoother access to capital for deep tech.
• Extended, reform-linked incentives for power distribution and transmission upgrades.
• Further customs and tax measures to secure and process critical minerals at scale.

Overall, corporate India is looking for a budget that sustains consumption while crowding in private investment across clean energy, technology, and strategic materials—strengthening Make in India and building future-ready industrial capacity.