Rajasthan rides the crest of renewable energy wave, attracts investments

The state emerges as the top destination for new investment projects in Q1FY26, displacing the more advanced states of Maharashtra and Gujarat

A flurry of new investment plans in the solar and wind power sectors has propelled Rajasthan to the top of the charts across states in terms of new capital expenditure announced during the first quarter (Q1) of 2025-26, overtaking Maharashtra and Gujarat, which usually occupy the top two spots.

 

“Rajasthan topped the fresh investment table with a total investment of ₹2,69,391.46 crore in the form of 419 new projects,” according to the latest quarterly survey of project investments in India by Projects Today, a firm tracking new and ongoing projects. 

This is only slightly higher than Maharashtra’s new investment tally of 684 projects worth just over ₹2.66 trillion in Q1, but far ahead of Gujarat’s 459 new projects worth ₹2.1 trillion announced between April and June. 

While overall investment plans across the country have risen 13.1 per cent sequentially from about ₹15.39 trillion in the last quarter of 2024-25 (FY25) to almost ₹17.41 trillion in Q1FY26, Rajasthan’s share has nearly doubled from 8.3 per cent to 15.5 per cent. The state ranked fourth in Q4FY25, with new investments of a little over ₹1.27 trillion, behind Karnataka (₹1.58 trillion), Gujarat (₹1.89 trillion), and Maharashtra (₹2.24 trillion). 

It would be a mistake to view the state’s Q1 performance as an aberration rather than the culmination of a steady rise. Through FY25, Rajasthan had emerged as the top challenger to Maharashtra and Gujarat, ranking third in attracting new investments, Projects Today data shows. A total of 873 new projects worth ₹4.65 trillion were announced in the state in FY25, well ahead of the southern states of Karnataka (₹3.92 trillion) and Andhra Pradesh (₹3.06 trillion), which are typically considered more attractive than Rajasthan. 

The state’s economy, traditionally driven by agriculture, mining and tourism, has been growing at an average of 8 per cent over the past four years — just a shade below India’s overall growth rate in the same period. During 2020-21, when the Covid-19 pandemic dented economic activity, Rajasthan’s gross state domestic product (GSDP) declined by just 1.82 per cent while the national economy contracted 5.8 per cent. 

The state, one of the country’s top producers of cement and crude oil, is now on investors’ radar in other sectors such as renewable energy, as the Q1 numbers show. 

“The dominance of solar and wind power projects in Q1 was clearly visible in Rajasthan, with around 86.4 per cent of the total fresh investment the state attracted in these two sectors,” the Projects Today survey noted. The state attracted 130 new solar and wind projects worth ₹2.33 trillion in Q1. In fact, investments in these sectors boomed across the country. 

“The solar and wind energy sectors, which have consistently attracted rising private interest since early 2024, emerged as the dominant recipients of fresh investment commitments in the latest quarter. The two sectors together attracted more fresh investment commitments than the two other major sectors, manufacturing and infrastructure,” Shashikant Hegde, Projects Today’s director and CEO, told Business Standard.

 

Maharashtra, for instance, saw 40 new projects in these sectors in Q1. In Gujarat, of the 459 new projects, investment intentions in solar and wind power surged and accounted for almost ₹1.79 trillion, equivalent to around 85 per cent of fresh investments in Q1. 

Andhra Pradesh moved up from ninth place among states in Q4FY25 to fifth in Q1FY26, thanks to 25 new solar and wind projects worth ₹0.59 trillion, along with the ambitious ₹0.82 trillion Polavaram-Banakacherla linking project of the Andhra Pradesh Irrigation & Command Area Development Department, aimed at tackling water scarcity in the drought-prone Rayalaseema region. These projects accounted for about 75 per cent of the ₹1.85 trillion investments announced in the state over Q1, according to Projects Today. 

As for Rajasthan, once considered a growth laggard included in the acronym BIMARU (Bihar, Madhya Pradesh, Rajasthan, and Uttar Pradesh), coined for states whose development trailed the national average, the tide now seems to be turning after a slew of new policies introduced last year. These include the Rajasthan Investment Promotion Scheme (RIPS) 2024 to attract domestic and international investment with incentives across sectors, along with new policy frameworks to boost mining, exports, micro, small and medium enterprises, and manufactured sand. 

In fact, barring Bihar, Rajasthan’s two other peers in the BIMARU grouping have also been rising up the investment ranks. The remaining five states in the Q1 top ten, which together accounted for one-quarter of total fresh investment in India in Q1FY26, were Karnataka, Assam, Madhya Pradesh, Uttar Pradesh and Telangana. In FY25, Madhya Pradesh ranked seventh across states, closely followed by Uttar Pradesh.