Synopsis: The Cabinet approved the Small Hydro Power (SHP) Development Scheme (FY 2026-31) with a Rs. 2,584.6 cr outlay, aiming to add 1,500 MW, boost rural employment, promote indigenous manufacturing, and benefit hydro and equipment companies.
Some companies are prominent players in India’s renewable energy sector, with expertise in hydroelectric power generation and distribution. Their experience in executing projects in challenging terrains positions them well to benefit from initiatives expanding small hydro capacity and supporting clean energy goals.
They also include leading manufacturers and suppliers of critical power equipment, such as turbines and generators. With the focus on decentralised small hydro projects, demand for efficient, reliable, and locally produced technology is expected to rise, providing growth opportunities across the sector.
Cabinet Approves Small Hydro Power Development Scheme
The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the Small Hydro Power (SHP) Development Scheme for the period FY 2026-27 to FY 2030-31. With an outlay of Rs. 2,584.60 crore, the scheme aims to install around 1,500 MW of small hydro capacity, boosting clean energy production and rural development.
The scheme targets small hydro projects of 1–25 MW, with special emphasis on hilly regions and North Eastern states with high potential. In North Eastern states and districts bordering other countries, central financial assistance will be Rs. 3.6 crore per MW or 30% of project cost, capped at Rs. 30 crore per project.
In other states, assistance will be Rs. 2.4 crore per MW or 20% of project cost, with a ceiling of Rs. 20 crore per project. This aims to promote hydro projects in remote and difficult-to-reach locations.
Investment Boost and Indigenous Manufacturing
Of the total outlay, Rs. 2,532 crore is earmarked for project implementation. The scheme is expected to attract Rs. 15,000 crore in investment, promoting clean energy initiatives, local economic growth, and employment. Notably, 100% of plant and machinery will be sourced from Indian manufacturers, supporting the Atmanirbhar Bharat initiative.
To ensure sustained development, the scheme provides incentives to states for preparing Detailed Project Reports (DPRs) for about 200 projects. Rs. 30 crore has been allocated to support state and central agencies in DPR preparation, creating a pipeline for future small hydro projects.
Employment Opportunities and Rural Development
SHP projects are expected to generate 51 lakh person-days of employment during construction, along with long-term jobs in operation and maintenance, mainly in rural and remote areas. The decentralised nature of these projects reduces the need for long transmission lines, lowering transmission losses and improving local energy access.
Small Hydro Power projects are environmentally friendly, as they avoid large-scale land acquisition, deforestation, and community displacement. With lifespans ranging from 40 to over 60 years, they provide long-term energy security and promote socio-economic development in remote areas.
The launch of this scheme is expected to renew India’s Small Hydro Power sector, accelerate utilisation of available hydro potential, and contribute significantly to India’s clean energy goals and rural development initiatives. Stocks that could benefit
NHPC Ltd
NHPC Ltd is a government-owned hydropower company and one of India’s largest hydro generators. With extensive experience in hydro projects, NHPC is well-positioned to secure orders and contracts for small hydro projects promoted under the SHP scheme.
With a market capitalisation of Rs. 78,301 cr, the shares of NHPC Ltd were trading at Rs. 78 per share, up from its previous close of Rs. 76.19 per share.
It reported a mixed performance for Q3FY26. Revenue slightly declined to Rs. 2,221 cr from Rs. 2,287 cr in Q3FY25. EBITDA dropped sharply by 79% to Rs. 212 cr from Rs. 1,015 cr. Net profit fell 3% to Rs. 321 cr from Rs. 330 cr. EPS also declined to Rs. 0.22 from Rs. 0.23
SJVN Ltd
SJVN Ltd operates hydro, solar, and wind assets, steadily expanding its renewable portfolio. The SHP scheme creates opportunities for SJVN to participate in small hydro projects, diversify its hydro portfolio, and benefit from central financial assistance. Its experience in executing hydro projects in challenging terrains makes it a key player for SHP opportunities.
With a market capitalisation of Rs. 27,940 cr, the shares of SJVN Ltd were trading at Rs. 71 per share, up from its previous close of Rs. 68.73 per share.
It posted strong year-on-year growth for Q3FY26. Revenue surged 61% to Rs. 1,082 cr from Rs. 671 cr in Q3FY25, while EBITDA rose 67% to Rs. 773 cr from Rs. 464 cr, reflecting robust operational performance. Net profit increased 50% to Rs. 224 cr from Rs. 149 cr, with EPS rising 50% to Rs. 0.57 from Rs. 0.38.
Tata Power Company Ltd
Tata Power Ltd has a diverse energy portfolio that includes hydro and other renewables. The SHP incentives could help Tata Power develop smaller hydro projects or form partnerships, enhancing its renewable energy mix and contributing to clean energy goals.
With a market capitalisation of Rs. 1,31,248 cr, the shares of Tata Power Company Ltd were trading at Rs. 410 per share, up from its previous close of Rs. 398.50 per share.
It reported a decline in financial performance for Q3FY26. Revenue fell 9% year-on-year to Rs. 13,948 cr from Rs. 15,391 cr in Q3FY25, while EBITDA declined slightly by 1% to Rs. 3,042 cr from Rs. 3,079 cr. Net profit stood at Rs. 1,194 cr from Rs. 1,188 cr, with EPS declining 25% to Rs. 2.42 from Rs. 3.23.
Bharat Heavy Electricals Ltd (BHEL)
BHEL is a leading manufacturer of turbines, generators, and other equipment for hydro power projects. An increase in small hydro project activity under the SHP scheme could raise demand for BHEL’s turbines and related equipment, indirectly benefiting the company by increasing orders from SHP developers across the country.
With a market capitalisation of Rs. 91,961 cr, the shares of Bharat Heavy Electricals Ltd were trading at Rs. 264 per share, up from its previous close of Rs. 251.65 per share.
It reported strong growth for Q3FY26. Revenue increased 16% year-on-year to Rs. 8,473 cr from Rs. 7,277 cr in Q3FY25, while EBITDA surged 79% to Rs. 545 cr from Rs. 304 cr, reflecting improved operational efficiency. Net profit jumped 189% to Rs. 390 cr, up from Rs. 135 cr a year ago, and EPS rose 187% to Rs. 1.12 from Rs. 0.39.
Triveni Turbine Ltd
Triveni Turbine Ltd manufactures and supplies hydro turbines and power generation solutions. The SHP scheme’s focus on small hydro capacity could drive demand for Triveni’s products and services, as developers seek high-efficiency turbines and customised solutions for decentralised hydro projects in remote locations.
With a market capitalisation of Rs. 14,607 cr, the shares of Triveni Turbine Ltd were trading at Rs. 459.50 per share, down from its previous close of Rs. 463.95 per share.
It delivered steady financial performance for Q3FY26. Revenue rose 24% year-on-year to Rs. 624 cr from Rs. 503 cr in Q3FY25, while EBITDA increased 22% to Rs. 133 cr from Rs. 109 cr, reflecting healthy operational growth. Net profit saw a modest decrease of 1% to Rs. 91.7 cr compared to Rs. 92.6 cr a year ago, and EPS remained largely flat at Rs. 2.90.
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