Guwahati: In a move expected to significantly boost clean energy infrastructure in the Northeast, the Union Cabinet chaired by Prime Minister Narendra Modi has approved the Small Hydro Power (SHP) Development Scheme (FY 2026–27 to 2030–31) with a total outlay of Rs 2,584.60 crore.
The scheme, targeting the installation of around 1,500 MW of small hydro capacity, is particularly tailored to benefit hilly and North Eastern states, where untapped hydro potential remains high, but large-scale projects are often unviable.
A key highlight for the Northeast is the enhanced central financial assistance, with projects eligible for Rs 3.6 crore per MW or 30% of the project cost (whichever is lower), capped at Rs 30 crore per project.
This is significantly higher than the Rs 2.4 crore per MW (or 20%) assistance earmarked for other states, underlining the Centre’s strategic focus on the region.
Officials said the scheme is designed to unlock hydro potential in remote, border, and difficult-to-access areas, a category where much of the Northeast falls. Of the total outlay, Rs 2,532 crore has been earmarked specifically for project development, while an additional Rs 30 crore will support the preparation of detailed project reports (DPRs) for around 200 future projects, many of which are expected to come from the region.
The initiative is projected to attract investments worth Rs 15,000 crore, while generating an estimated 51 lakh person-days of employment, offering a major economic boost to rural and remote communities across the Northeast.
Importantly, small hydro projects, typically ranging from 1 MW to 25 MW, are seen as more environmentally sustainable compared to large dams, as they involve minimal land acquisition, limited ecological disruption, and negligible displacement.
Their decentralised nature also reduces the need for extensive transmission infrastructure, a key advantage in geographically challenging terrains like the Northeast.
The government also emphasised that the scheme aligns with the Atmanirbhar Bharat vision, with 100% of plant and machinery expected to be sourced domestically.
With long operational lifespans of 40 to 60 years, these projects are expected to play a crucial role in strengthening energy access, boosting local economies, and advancing India’s clean energy transition, particularly in the Northeast, where such decentralised solutions could be transformative.