Archive · 26 Jan 2026
India Approves Accounting Reform for Clean Energy
India's accounting regulators have made a big change to help businesses that use clean energy.
Before, when companies sold extra green power back to the grid, it caused problems in their financial reports because the amount of power they could sell was unpredictable.
The new rule says that if a company uses more power than it sells back, the contracts won't be treated like financial trades.
This means their financial reports won't have as much ups and downs.
The change also makes Indian rules match international ones.
This is good news for small and medium-sized businesses that are trying to use more green energy to stay competitive and meet global rules.
It will make their financial reports more stable and easier to understand.
India's NFRA and ICAI approved amendments to accounting standards Ind AS 107 and Ind AS 109 for renewable energy contracts.
Green power purchase contracts will no longer be treated as financial contracts if the buyer’s total power intake exceeds the amount sold back to the grid.
The move aligns Indian standards with International Financial Reporting Standards (IFRS) and aims to reduce volatility in financial statements.
The reform is expected to benefit Micro, Small, and Medium Enterprises (MSMEs) by stabilizing their financial statements and reducing compliance complexity.
The amended norms are proposed to take effect on 1 April, following a decision made on 14 January.
- Who
- National Financial Reporting Authority (NFRA) and Institute of Chartered Accountants of India (ICAI)
- What
- Approved amendments to accounting standards Ind AS 107 and Ind AS 109 for renewable energy contracts
- When
- Effective from 1 April, decision made on 14 January
- Where
- India
- Why
- To address accounting challenges and volatility in financial statements due to renewable energy contracts
- Regulatory Bodies
- NFRA, ICAI
- Amended Standards
- Ind AS 107, Ind AS 109
- Effective Date
- 1 April
- Impacted Enterprises
- Micro, Small, and Medium Enterprises (MSMEs)
- Global Alignment
- International Financial Reporting Standards (IFRS)
- Meeting Date
- 14 January
- Key Benefit
- Stabilizes financial statements, reduces compliance complexity
