New Delhi: The government has released India’s first-ever National Policy on Geothermal Energy (2025), proposing a package of fiscal and financial measures to address the high upfront costs and risks of geothermal exploration. The draft framework seeks to make geothermal a viable addition to India’s renewable energy mix, with proposals ranging from concessional loans and viability gap funding to tax holidays and duty exemptions.
Until now, geothermal energy has lacked a dedicated national framework in India, despite the Geological Survey of India identifying more than 380 hot springs and 10 geothermal provinces across the country. The new policy lays down a structured roadmap for exploration, permitting, and project development, positioning geothermal as part of India’s renewable energy mix alongside solar, wind, hydro, and bioenergy.
According to the Ministry of New and Renewable Energy (MNRE), geothermal energy can provide baseload renewable electricity, offering reliability and grid stability not always possible with intermittent sources. It also supports India’s goal of achieving Net Zero emissions by 2070.
Geothermal projects are site-specific and capital intensive, with most costs incurred upfront during exploration and drilling. To offset these risks, the policy proposes measures such as concessional loans from public and private sector financial institutions, sovereign green bonds, and viability gap funding. It also suggests fiscal support in the form of import duty and GST exemptions on equipment, accelerated depreciation benefits, and tax holidays.
If adopted, these steps could place geothermal projects at par with other renewable sources, with eligibility for “must-run” status, open access waivers, and inclusion under the Indian Carbon Credit Trading Scheme.
The policy expands geothermal’s scope beyond electricity generation to include district heating and cooling, greenhouse farming, aquaculture, cold storage, tourism, and ground source heat pumps. It also outlines innovative uses such as retrofitting abandoned oil and gas wells for geothermal projects, and the extraction of critical minerals like lithium and silica as by-products of geothermal heat.
As a first step, MNRE has sanctioned five geothermal pilot and resource assessment projects at potential sites. The ministry is also exploring international collaborations with countries that lead in geothermal development, including the United States, Indonesia, and the Philippines, as well as partnerships with multilateral financing institutions.
By proposing this policy, India positions itself as a new entrant in the small global club of countries formally pursuing geothermal energy. The move signals a push to diversify its renewable energy portfolio, strengthen energy security in remote regions such as Ladakh and the Northeast, and advance toward long-term decarbonisation.
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