Development/Upgradation of Watermills and setting up Micro Hydel Projects (up to 100 KWcapacity)

This scheme is administered by the Ministry of Micro, Small & Medium Enterprises . It was launched to promote decentralised, small-scale hydro power generation by supporting the development and upgradation of traditional watermills and by setting up new micro hydel projects up to 100 kW capacity. The purpose is to provide clean energy access, enhance livelihood opportunities in remote/rural areas and support energy self-reliant enterprises. Through this scheme, you as an MSME or entrepreneur can benefit by obtaining assistance for setting up or upgrading watermill/micro hydel systems, thereby reducing cost and entering into energy/infrastructure segment.

Key Features
Financial Assistance
Eligibility Criteria
Documents Required
Application Process for the Scheme

Key Features

Grant of CFA for WM and MHP: The scheme provides a grant to support both the development or upgradation of existing watermills and the establishment of micro hydel projects of up to 100 kW capacity. This means if you plan to convert or improve a traditional watermill or set up a small hydel unit in your region, you can avail assistance.
Preference given to women-owned/managed watermills and NGOs: The guidelines specify that preference will be given to watermills which are owned by women entrepreneurs or transferred to women NGOs. This encourages gender inclusion and supports enterprises led by women.
Support for associated activities: surveys, database strengthening, training & capacity building: In addition to direct capital assistance, the scheme envisages support for training local rural organisations, conducting specialised studies and building a database of watermill/micro hydel resources. Thus you can also benefit from capacity building and knowledge inputs, not just equipment.
Service charge incentive to SNAs: The scheme allows service charge/incentive payments to State Nodal Agencies or implementing NGOs who assist units under the scheme. For example, for a mechanical-mode watermill, an incentive is specified; similarly for electrical or combination modes. This ensures implementation support is available locally.

Financial Assistance

Component	Assistance Provided	Detailed Explanation & Example
Grant for Watermills	A specified amount of central grant per watermill in mechanical mode	Example: For a watermill operating only mechanical output, SNA may receive an incentive of Rs 2,500/month for mechanical mode.
Grant for Watermills	Higher specified grant amount for watermill in electrical or combined mode	Example: A watermill converted to electrical output may get an incentive of Rs 10,000 for that mode.
Grant for Micro Hydel Projects up to 100 kW	Central assistance in terms of service charge minimum of 1% of subsidy or minimum Rs 25,000 for each MHP	Example: If the subsidy for an MHP is Rs 20 lakh, 1% = Rs 20,000, but minimum specified is Rs 25,000 so the implementing agency gets at least Rs 25,000 service charge.

Eligibility Criteria

Who can apply:

Implementation by State Government Department / State Nodal Agency / Local Bodies / Cooperatives / NGOs / Entrepreneurs / Individuals .
For watermills: existing or new watermills of up to 5 kW output were covered.
For micro hydel projects : Projects up to 100 kW capacity.
Projects in remote/hilly/forest-fringe locations were particularly targeted; implementation by NGOs/cooperatives/communities encouraged.

Who cannot apply:

Large hydropower projects beyond 100 kW or those not conforming to specified size limits.
Projects that commenced without proper approval or did not meet the eligibility criteria of the ownership or implementation body.
Units outside the defined geographical / implementation categories as per scheme norms.
Because this scheme is no longer active, new proposals are not eligible - only legacy/ongoing projects would be covered by past sanction.

Documents Required

Project report covering capacity, head/discharge, generation, cost estimates, schedule.
State Govt approval for the project or ownership/lease proof for watermill.
Proof of land or site availability.
Technical drawings/feasibility studies for watermill upgradation or micro hydel.
Invoices/receipts of expenditure .
Utilisation certificate of previous advance .
Completion report, photographs of installation, generation data or output data .
Bank details of the implementing agency/owner for disbursement.
Any other documents specified by the State Nodal Agency or MNRE in the sanction order.

Application Process for the Scheme

Option 1: Apply with Bullit

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Option 2: Government Process via MNRE

Identify potential site (watermill upgradation or micro hydel ≤100 kW).
Prepare a project report or relevant technical details .
Submit application to the Ministry of New & Renewable Energy through State Nodal Agency or designated agency, with required documents.
Upon sanction, the CFA is released in installments based on physical/financial progress:
- For watermills: 50% advance, 50% on completion.
- For MHP: 25% advance, 65% on 25% physical progress, 10% on commissioning.
Post-installation, submit completion report, photographs, utilisation certificate, statement of expenditure, generation data .

Option 3: Via State/UT Nodal Agency
Some states may have implemented the scheme via their state nodal agency for renewable energy in coordination with MNRE. Applicants should consult the SNA in their state for specifics.