India Small Hydropower Market Research Report and Industry Forecast

India Small Hydropower Market Size and Share: 

The India small hydropower market size reached USD 124.46 Million in 2024. The market is expected to reach USD 204.04 Million by 2033, exhibiting a growth rate (CAGR) of 5.2% during 2025-2033. The market growth is attributed to the implementation of government initiatives promoting renewable energy, the need for rural electrification, and the country's abundant water resources suitable for small-scale projects.

Market Insights:

• Based on region, the market is divided into North India, South India, East India, and West India.
• On the basis of capacity, the market is segmented into up to 1 MW and 1–10 MW.
• Based on the component, the market is categorized as turbine, generator, electric infrastructure, intake valves and penstock, and others.

Market Size and Forecast:

• 2024 Market Size: USD 124.46 Million
• 2033 Projected Market Size: USD 204.04 Million
• CAGR (2025-2033): 5.2%

India Small Hydropower Market Trends:

Growing Expansion of Renewable Energy

India is undergoing a significant transformation in its energy sector, focusing on increasing the share of renewable sources. The country has set ambitious goals to enhance its capacity in solar, wind, hydroelectric, and other renewable energies. This shift aims to reduce dependence on fossil fuels, decrease greenhouse gas emissions, and promote sustainable development. The government's policies and initiatives are designed to attract investments, encourage technological advancements, and facilitate the integration of renewable energy into the national grid. This, in turn, is augmenting the India small hydropower market share. Challenges such as infrastructure development, financing, and regulatory frameworks are being addressed to ensure the successful implementation of these initiatives. India's commitment to renewable energy reflects its dedication to environmental sustainability and energy security. As of October 2024, India's small hydropower capacity has reached 5.07 GW contributing to the nation's total renewable energy capacity of 203.18 GW. This growth underscores India's commitment to expanding its renewable energy portfolio. ​This significant progress aligns with India's goal of achieving 500 GW of non-fossil fuel electricity generation capacity by 2030.

Strategic Enhancement of Hydropower Capacity

India is actively enhancing its hydropower capacity to meet escalating electricity demand. This trend is propelling the small hydropower market growth. The government has optimized hydropower generation, adding additional capacity to the grid. This initiative aligns with directives for coal and gas-based thermal plants to operate during peak summer months, aiming to address the anticipated peak demand and prevent potential outages during hotter-than-usual seasons. Beyond immediate measures, India is investing in long-term hydropower projects, with significant capacity currently under construction, projected to increase total hydro capacity in the coming years. These efforts underscore India's commitment to bolstering its energy infrastructure, ensuring a stable and sustainable power supply amidst growing consumption needs. For instance, in May 2024, the Indian government optimized hydropower generation to address rising peak power demand, adding an extra 4 GW capacity. This move follows directives for coal and gas-based thermal plants to operate during summer months, aiming to meet the anticipated 240 GW peak demand and prevent potential outages during the hotter-than-usual season.

Cross-Border Collaboration in SHP Technology and Expertise

Cross-border partnerships are emerging as a significant driver of innovation in the market, which is further enhancing the India small hydropower market outlook. Collaborations with technologically advanced small hydropower (SHP) markets such as Austria, Norway, and Nepal are enabling the transfer of next-generation turbine designs, advanced environmental mitigation practices, and specialized construction methodologies suited to complex geographies. Indian developers are increasingly entering joint ventures to acquire expertise in niche areas, including low-head hydropower solutions, microgrid integration, and automated control systems. Multilateral platforms, such as South Asian regional energy forums, are fostering harmonized technical standards and facilitating joint ventures in transboundary river basins. These collaborations not only accelerate the adoption of advanced technologies but also create opportunities for India to expand its SHP equipment exports. By leveraging this international knowledge exchange, India is strengthening its position as a competitive regional hub for small-scale hydropower engineering and manufacturing.

Climate-Resilient SHP Infrastructure Development

The industry is placing growing emphasis on climate-resilient infrastructure to address the operational challenges arising from shifting hydrological patterns. Variability in monsoon intensity, diminishing Himalayan snowmelt, and irregular river flows are prompting developers to implement adaptive engineering solutions. Some of the key measures include variable-flow turbine systems, reinforced intake structures, advanced sediment management mechanisms, and flexible penstock configurations to sustain optimal performance across fluctuating water levels. Furthermore, as per the India small hydropower market forecast, the integration of hydrological modeling during project planning will enable the simulation of diverse climate scenarios, ensuring optimal plant design and operational stability. Also, these resilience-focused interventions will safeguard long-term generation capacity, mitigate financial risks, and enhance investor confidence. In climate-sensitive catchments, such measures are increasingly becoming prerequisites for regulatory approvals and for securing funding from multilateral agencies committed to climate-adaptive infrastructure investments.

Some of the other key factors shaping the market include:

• MNRE’s Tiered Subsidy Framework: The Ministry of New and Renewable Energy (MNRE) offers tiered capital subsidies based on plant capacity and location, with higher incentives for remote and hilly areas. This targeted approach reduces project costs and encourages private sector participation. It also aligns SHP deployment with regional energy access goals.
• State-Specific SHP Development Models: States like Himachal Pradesh follow a consent-based model involving local stakeholders to ensure smooth land acquisition and environmental compliance. Karnataka, by contrast, leverages Public–Private Partnerships (PPPs) to drive rapid SHP capacity growth. These tailored models reflect each state’s resource profile and governance style.
• AI-Driven Optimization and Canal-Based SHP: Tamil Nadu is piloting AI-based optimization systems to enhance load forecasting and water flow management in SHP plants. Punjab is integrating SHP into irrigation canals, enabling power generation without building new dams. These innovations improve efficiency while minimizing ecological disturbance.
• Digital Retrofitting and Eco-Friendly Upgrades: Old SHP plants are being retrofitted with digital SCADA systems for real-time monitoring and control. The use of fish-friendly turbines is improving aquatic ecosystem protection. Central government funding is accelerating these upgrades, thereby extending plant life and performance. Also, this trend is expanding the India small hydropower industry size.
• Domestic Manufacturing and Modular Deployment: BHEL and Voith are expanding localized turbine production to cut costs and reduce import dependence. Moreover, modular SHP components are enabling faster installation and easier maintenance in challenging terrains. This approach shortens project timelines and supports domestic manufacturing.
• Dual-Utility SHP Applications: In Jammu and other regions, SHP projects are being designed to power both irrigation systems and water purification facilities. This dual-use model maximizes infrastructure utility while improving rural water security. It also strengthens the case for SHP funding in multi-benefit projects.
• Workforce Capacity Building in SHP: Assam has launched specialized training programs to build a skilled technician base for SHP operations and maintenance. These initiatives focus on both technical and safety competencies. By closing workforce gaps, these initiatives help ensure long-term plant reliability.

India Small Hydropower Market Segmentation:

IMARC Group provides an analysis of the key trends in each segment of the market, along with forecasts at the region/country level for 2025-2033. Our report has categorized the market based on capacity and component.

Capacity Insights:

• Up to 1 MW
• 1–10 MW

The report has provided a detailed breakup and analysis of the small hydropower industry in India based on the capacity. This includes up to 1 MW and 1–10 MW.

Component Insights:

• Turbine
• Generator
• Electric Infrastructure
• Intake Valves and Penstock
• Others

A detailed breakup and analysis of the market based on the component have also been provided in the report. This includes turbine, generator, electric infrastructure, intake valves and penstock, and others.

Regional Insights:

• North India
• South India
• East India
• West India

The report has also provided a comprehensive analysis of all the major regional markets, which include North India, South India, East India, and West India.

Competitive Landscape:

The market research report has also provided a comprehensive analysis of the competitive landscape. Competitive analysis such as market structure, key player positioning, top winning strategies, competitive dashboard, and company evaluation quadrant has been covered in the report. Also, detailed profiles of all major companies have been provided.

India Small Hydropower Market News:

• In May 2025, the Ministry of New and Renewable Energy (MNRE) issued revised guidelines aimed at simplifying procedures and addressing longstanding challenges in Small Hydro Power (SHP) schemes, making them applicable to projects sanctioned under the 2009 and 2014 frameworks. Notably, developers can now secure the full second installment of Central Financial Assistance (CFA) by achieving 80% of projected power generation in any one corresponding month, rather than for three consecutive months, with any shortfall resulting in a proportionate reduction of that installment.
• In February 2025, ​Arunachal Pradesh Deputy Chief Minister reviewed the state's small hydropower projects, emphasizing alignment with Atmanirbhar Arunachal and India's net-zero goals. The state has allocated 35 small hydropower projects totaling 570.75 MW, expecting an investment of INR 7,000 crore and creating 7,500 jobs. Upon completion, these projects are projected to generate INR 58.25 crore annually in revenue from free power.
• In July 2024, the Indian Renewable Energy Development Agency Limited (IREDA) announced its plans to invest approximately INR 290 crore in Nepal's 900 MW Upper Karnali Hydro-Electric Power Project. This strategic move aims to enhance regional energy security and sustainable development, potentially benefiting India's renewable energy landscape and expanding small hydropower industry size in India.

India Small Hydropower Market Report Coverage:

Key Benefits for Stakeholders:

• IMARC’s industry report offers a comprehensive quantitative analysis of various market segments, historical and current market trends, market forecasts, and dynamics of the India small hydropower market from 2019-2033.
• The research report provides the latest information on the market drivers, challenges, and opportunities in the India small hydropower market.
• Porter's five forces analysis assist stakeholders in assessing the impact of new entrants, competitive rivalry, supplier power, buyer power, and the threat of substitution. It helps stakeholders to analyze the level of competition within the India small hydropower industry and its attractiveness.
• Competitive landscape allows stakeholders to understand their competitive environment and provides an insight into the current positions of key players in the market.