Does Union Budget 2025-26 Do Enough to Address Climate Change?

Finance Minister Nirmala Sitharaman presented the Budget for the financial year 2025–26 in Parliament last week. What did she say on the issue of climate change, and what was missing? Let’s take a look.

Sitharaman announced the government’s plans to boost the manufacturing of solar PV cells, EV batteries, wind turbines, and other clean technologies to increase clean energy generation in India. She also announced the exemption of basic customs duty on critical minerals, including cobalt powder, waste lithium-ion battery scrap, lead, and other key minerals, to aid their processing by MSMEs. The exemption of customs duty on cobalt is expected to facilitate lithium-ion battery manufacturing, while the removal of basic customs duty on lithium-ion battery scrap could boost EV battery recycling.

Experts say these policy changes need to be further supported by infrastructure development for recycling, transportation, and the ease of importing lithium-ion battery scrap from other countries.

Sitharaman also announced the development of 100 GW of nuclear energy by 2047 under the Nuclear Energy Mission, with proposed amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act to enable private sector partnerships. Additionally, ₹20,000 crore has been allocated for research into indigenous small modular reactors by 2033. However, it should be noted that the total budget estimate for the Department of Atomic Energy, the nodal agency responsible for implementing nuclear energy missions, has been reduced by ₹402 crore this year.

This year’s Budget underscores the Union government’s plans for mitigating climate change through clean energy transition. But does it do enough to equip the country to adapt to the adverse impacts of climate change?

In the Budget document, the National Adaptation Fund, the Climate Change Action Plan, and two other schemes have been reclassified as non-scheme expenditures without clear budget estimates—this despite the government highlighting the importance of adaptation in the Economic Survey published on 31 January 2025. While the Budget places significant emphasis on mitigating climate change in India, more needs to be done on the adaptation front.