India ranks fourth in the world for renewable energy generation, with a year-on-year growth rate of 9.8%. As of November 2024, India has crossed 200 gigawatts (GW) of installed renewable energy capacity, against a target of 500 GW by 2030. India is the third-largest energy-consuming country, with high carbon emissions, making it essential for the government to focus on renewable energy as an alternative source of power. India’s renewable energy sources include solar power, wind power, hydropower, and biogas installations. Solar and wind power account for the largest share of installations in the country, with a combined installed capacity of 126 GW out of the total 203 GW as of November 2024.
Four states—Rajasthan, Gujarat, Tamil Nadu, and Karnataka—are the leading contributors to India’s renewable energy sector in terms of solar and wind power installations. These states have specific regulatory requirements for renewable energy generation industries. The regulatory process in India begins with the selection of installation sites, and compliance requirements continue throughout the operational phase.
In India, regulatory responsibilities are shared between the central and state governments. The majority of these regulations are region-specific and vary based on local laws. As a result, the compliance requirements differ across locations, making it challenging to stay fully informed and compliant with the varying regulations.
Compliance requirements for renewable energy companies begin with land acquisition, renewable purchase obligations, grid integration, environmental clearances, environmental impact assessments, financial regulations, and employee and labor-related obligations, among others. These companies operate under the framework of the Electricity Act, 2003, the Energy Conservation Act, 2001, and other relevant legislation. The Ministry of New and Renewable Energy, the Central Electricity Regulatory Commission, and State Regulatory Commissions oversee the regulation of renewable energy companies in India.
Obtaining environmental clearances and conducting environmental impact assessments are crucial steps for starting renewable energy operations in India. The recent introduction of Business Responsibility and Sustainability Reporting (BRSR) and the disclosure of Environmental, Social, and Governance (ESG) factors mark significant milestones in India’s focus on environmental compliance.
The Government of India, through the Ministry of New and Renewable Energy, has published several policies to promote the renewable energy sector. These policies assist renewable energy companies in complying with applicable regulations when setting up new units and making investments. Both Central and State authorities issue these policies to enhance the Ease of Doing Business in the Country and attract investment into the renewable energy sector. The primary objectives of these policies are to foster investment, create employment opportunities, enhance skills, and encourage local manufacturing in the renewable energy industry.
Under the Ease of Doing Business initiative, the policies focus on various sectors within renewable energy, including solar energy, green hydrogen, wind energy, and more. The objective of these policies is to simplify compliance requirements and promote the growth of the renewable energy sector in the country.
Some of the new and evolving policies for renewable energy companies in India are:
Foreign Direct Investment (FDI) Policy: The Government of India permits 100% FDI in the renewable energy sector under the automatic route.
Project Development Cell: A dedicated cell has been set up to attract and facilitate investments.
Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM): Launch of this scheme to promote solar energy among farmers.
Waiver of Inter-State Transmission System (ISTS) Charges: Waiver for inter-state sale of solar and wind power for projects commissioned by June 30, 2025.
Renewable Purchase Obligation (RPO) Trajectory Policy: A policy outlining the RPO targets up to the year 2030.
Uniform Renewable Energy Tariff Policy: Guidelines for implementing uniform renewable energy tariffs.
Ultra Mega Renewable Energy Parks Policy: A policy for setting up large-scale renewable energy parks, providing land and transmission infrastructure to developers.
Transmission Infrastructure Development: Laying new transmission lines and creating new substation capacities for the evacuation of renewable energy.
Production Linked Incentive (PLI) Scheme for High-Efficiency Solar PV Modules: A scheme to boost local manufacturing of high-efficiency solar panels.
National Green Hydrogen Mission: The launch of this mission to promote green hydrogen production and use.
Green Term Ahead Market (GTAM): Introduction of a market to facilitate the sale of renewable energy power through exchanges.
The policies published by the Government of India and several states help the renewable energy sector stay compliant and promote growth without barriers. The wide range of relaxations announced under these policies covers investment, the setting up of large-scale renewable energy production units, an open forum for the sale of renewable energy, reasonable tariffs, transmission arrangements, production incentives, and more, all of which boost the growth of the renewable energy sector in India. These policies also ensure compliance with applicable rules and regulations.
According to sources from the Department for Promotion of Industry and Internal Trade (DPIIT), India has received approximately USD 18 billion in FDI equity investment in the renewable energy sector over the last three financial years and the current financial year.
The Government of India has taken several steps and initiatives to promote and accelerate renewable energy capacity in the country, with a target of achieving 500 GW of installed electric capacity from non-fossil sources by 2030. The top 1,000 market-cap companies in India, as directed by SEBI, are required to publish the Business Responsibility and Sustainability Reporting (BRSR) starting from 2023. India’s targeted Environment, Social, and Governance (ESG) disclosures for the value chain (suppliers) will apply to the top 250 listed entities by market capitalization on a comply-or-explain basis from FY 2024–25. Through the use of technology and monitoring mechanisms, the Indian government will track the risks and opportunities disclosed in the BRSR. The government is also taking necessary actions to minimize CO2 emissions and reduce pollution in the air, water, and soil, using the disclosed data from top companies to encourage renewable energy. During the G20 New Delhi Leaders’ Summit, India agreed to encourage efforts to triple global renewable energy capacity through existing targets and policies, while demonstrating similar ambition for other zero- and low-emission technologies.
In conclusion, the policies introduced by the Government of India and few of its state authorities play a major role in compliances of the renewable energy sector. The policies simplify the compliance requirements, offering investment incentives, and creating a support framework for the establishment of renewable energy sector.
