India’s Geothermal Moment: The Legal and Investment Framework under the National Policy on Geothermal Energy, 2025

This article has been prepared for general informational purposes based on legislation, policy documents, and publicly available materials from the jurisdictions referenced.
Translations, where required, have been generated using publicly available resources and AI-based tools.
This article does not constitute legal advice and should not be relied upon as such.

Authors: Palak Dogra (Ms.) and Tushar Todi (Mr.)

Reference Date \| Version	29 November, 2025 \| 1.0
Keywords	National Policy on Geothermal Energy 2025, Ministry of New and Renewable Energy (MNRE), Renewable Energy, Foreign Direct Investment, Mines and Minerals (Development and Regulation) Act 1957 (MMDR Act), Geothermal Energy, Clean Energy Regulation
Legislation(s)/Policies	(i) National Policy on Geothermal Energy, 2025 (ii) Oilfields (Regulation & Development) Act, 1948 (iii) Mines and Minerals (Development and Regulation) Act, 1957 (iv) Electricity Act, 2003 (v) Environment (Protection) Act, 1986 (vi) Forest (Conservation) Act, 1980 (vii) Wildlife (Protection) Act, 1972 (viii) Water (Prevention and Control of Pollution) Act, 1974
Jurisdiction	India

Date of First Publication: 29 November 2025

India’s National Policy on Geothermal Energy 2025 finally gives the geothermal sector a clear, structured, and comprehensive regulatory framework. It addresses previously unresolved issues around exploration permits, long-term development tenure, drilling standards, tariff formulation, fiscal incentives, and the treatment of mineral by-products under the MMDR Act. With MNRE-led permitting, state-level single-window clearances, environmental and forest approvals, and grid-access provisions under the Electricity Act, geothermal projects must now navigate a defined—yet intricate—compliance landscape.

In this environment, developers and investors increasingly require targeted legal consulting on exploration-permit strategy, drilling and subsurface rights, land and environmental compliance, MMDR-linked mineral extraction, grid code alignment, and renewable-energy investment structuring. Legal support is rapidly becoming essential to secure approvals, manage regulatory risk, and build bankable geothermal power and direct-use projects under India’s emerging geothermal regime.

A. India’s Evolving Energy Landscape

India’s energy landscape has witnessed a dramatic shift over the past decade. With the dual goals of achieving energy independence by 2047 and net-zero emissions by 2070, India has positioned itself as one of the world’s fastest-growing renewable energy markets.

According to the Press Information Bureau (22 June 2025), India’s total installed power capacity reached 476 GW, comprising:

240 GW of thermal power
110.9 GW of solar
51.3 GW of wind
235.7 GW (49%) from non-fossil sources

Despite this progress, intermittency remains a structural challenge. Solar and wind—while cost-effective and scalable—are inherently variable. To achieve round-the-clock renewable power and stabilize the grid, India requires firm and dispatchable clean energy. Geothermal energy, although currently negligible in India’s energy mix, represents a carbon-free, baseload solution that can complement variable renewables.

B. Why Geothermal Matters Now

Past Barriers

Since 1973, the Geological Survey of India (GSI) has identified more than 381 hot spring sites across ten geothermal provinces. As per the National Policy on Geothermal Energy 2025, most of these sites are low- to medium-temperature resources (100–180°C), suitable primarily for direct-use applications—such as heating, cooling, greenhouse operations, and cold storage—rather than conventional power generation.

High-enthalpy reservoirs (200°C and above) capable of supporting power generation are limited to a few Himalayan zones. Combined with high upfront drilling costs and the absence of a dedicated policy, the geothermal sector historically saw minimal private investment.

New Drivers of Revival

The policy environment has shifted due to technological advances and India’s growing need for firm clean energy. The 2025 Policy notes that modern binary-cycle and Organic Rankine Cycle (ORC) technologies now enable power generation even from lower-temperature resources. India’s oil and gas expertise can also be leveraged to reduce drilling risk and repurpose abandoned wells for geothermal applications.

C. The National Policy on Geothermal Energy, 2025

A Policy with a Purpose

The Policy marks India’s first structured framework for geothermal exploration, development, and utilization, placing geothermal squarely under MNRE’s jurisdiction and aligning it with the broader renewable energy ecosystem.

Vision Statement

“To establish geothermal energy as a major pillar of India’s renewable energy landscape, contributing to national climate commitments, the 2070 net-zero goal, and long-term energy security.”

Scope and Coverage

The Policy covers eight primary categories:

Geothermal Resource Assessment
Geothermal Drilling (shallow and deep)
Geothermal Power Production (dry steam, flash, binary, ORC)
Direct-use applications (industrial, agricultural, tourism, etc.)
GSHP systems
Innovative Technologies (EGS, AGS, hybrid geo-solar)
Geothermal from abandoned oil & gas wells
Mining of Mineral By-Products (e.g., lithium, boron) subject to the MMDR Act

Strategic Goals

R&D and technology enhancement
Global collaboration
Direct-use deployment
Oil & gas sector synergy
Public–private ecosystem creation
Capacity building

D. Legal and Regulatory Architecture

Jurisdiction and Institutional Roles

Geothermal energy is formally placed under MNRE’s mandate via the Allocation of Business Rules. Developers must coordinate with State Governments for site allocation, after which they may apply for geothermal exploration permits and land leases.

States must establish a single-window nodal agency to facilitate all statutory approvals, including:

Land and water permissions
Environmental and forest clearances
Wildlife and pollution-control approvals
Transmission access

Permitting and Tenure

Exploration Permit: 3 years + 2-year extension
High-altitude areas: Additional 2-year extension
Development tenure: Up to 30 years, extendable based on resource availability

Environmental Governance

Projects are subject to the Environment (Protection) Act, Forest (Conservation) Act, Wildlife Protection Act, and Water Act, depending on location. MNRE may also issue geothermal-specific E&S guidelines.

Overlap with Other Laws

Oilfields Act, 1948 (coordination in petroleum basins)
MMDR Act, 1957 (mineral by-product extraction)
Electricity Act, 2003 (generation, grid connectivity)

Tariff, Incentives & FDI

The Policy reaffirms 100% automatic-route FDI for geothermal as part of India’s renewable energy sector. MNRE and CERC may develop tariff norms and grid-code treatment.

Indicative fiscal incentives include:

Import duty and GST exemptions
Accelerated depreciation and tax holidays
Concessional financing, VGF, risk-mitigation grants
Eligibility for Carbon Credit Trading Scheme (2023)

E. Investment Outlook

Geothermal represents a new asset class within India’s renewable portfolio. With potential for baseload power and industrial decarbonization, the sector could become bankable once tariff guidelines and state frameworks mature.

Repurposing inactive oil & gas wells, as seen in the ONGC–Ladakh pilot at Puga, may offer early proof-of-concept projects at lower cost.

Direct-use geothermal applications—district heating, cold storage, greenhouse heating, industrial process heat, and tourism—are likely to scale faster than power generation due to India’s resource profile.

F. Conclusion

The National Policy on Geothermal Energy 2025 marks a pivotal shift in India’s clean-energy strategy. As India moves from capacity expansion to energy-system reliability, geothermal provides the missing piece: round-the-clock renewable power and industrial heat decarbonization. If policy intent translates into timely execution, geothermal could emerge as the fourth pillar of India’s renewable energy system—joining solar, wind, and hydro.

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