diff --git a/export.ps1 b/export.ps1
index 12b03f71fe..2daa7575aa 100644
--- a/export.ps1
+++ b/export.ps1
@@ -63,7 +63,7 @@ if ($dif_Path -ne $null) {
 
 Write-Output "Checking if Python packages are up to date..."
 
-Start-Process -Wait -NoNewWindow -FilePath "python" -Args "$IDF_PATH/tools/check_python_dependencies.py"
+Start-Process -Wait -NoNewWindow -FilePath "python" -Args "`"$IDF_PATH/tools/check_python_dependencies.py`""
 if ($LASTEXITCODE -ne 0) { exit $LASTEXITCODE } # if error
 
 Write-Output "
diff --git a/tools/windows/tool_setup/idf_cmd_init.ps1 b/tools/windows/tool_setup/idf_cmd_init.ps1
new file mode 100644
index 0000000000..280f3dc4da
--- /dev/null
+++ b/tools/windows/tool_setup/idf_cmd_init.ps1
@@ -0,0 +1,108 @@
+# This script is called from a Windows shortcut, with
+# the working directory set to an ESP-IDF directory.
+# Its purpose is to support using the "IDF Tools Directory" method of
+# installation for ESP-IDF versions older than IDF v4.1.
+# It does the same thing as "export.ps1" in IDF v4.1.
+
+Param
+(
+    [String]$IdfGitDir,
+    [String]$IdfPythonDir
+)
+
+$IDF_PATH = "."
+$isEspIdfRoot = (Test-Path "$IDF_PATH/tools/idf.py")
+if (-not $isEspIdfRoot) {
+    Write-Output "Usage: idf_cmd_init.ps1 ^<Python directory^> ^<Git directory^>"
+    Write-Output "This script must be invoked from ESP-IDF directory."
+}
+
+# Strip quotes
+$IdfGitDir = $IdfGitDir.Trim("`"")
+$IdfPythonDir = $IdfPythonDir.Trim("`"")
+
+# Add Python and Git paths to PATH
+$env:PATH = "$IdfGitDir;$IdfPythonDir;$env:PATH"
+Write-Output "Using Python in $IdfPythonDir"
+python.exe --version
+Write-Output "Using Git in $IdfGitDir"
+git.exe --version
+
+# Check if this is a recent enough copy of ESP-IDF.
+# If so, use export.ps1 provided there.
+$isExport = (Test-Path "$IDF_PATH/export.ps1")
+if ($isExport){
+    . $IDF_PATH/export.ps1
+}
+else {
+    Write-Output "IDF version does not include export.ps1. Using the fallback version."
+
+    if ((Test-Path "$IDF_PATH/tools/tools.json")){
+        $IDF_TOOLS_JSON_PATH = "$IDF_PATH/tools/tools.json"
+    }
+    else{
+        Write-Output "IDF version does not include tools/tools.json. Using the fallback version."
+        $IDF_TOOLS_JSON_PATH = "$PSScriptRoot/tools_fallback.json"
+    }
+
+    if ((Test-Path "$IDF_PATH/tools/idf_tools.py")){
+        $IDF_TOOLS_PY_PATH = "$IDF_PATH/tools/idf_tools.py"
+    }
+    else{
+        Write-Output "IDF version does not include tools/idf_tools.py. Using the fallback version."
+        $IDF_TOOLS_PY_PATH = "$PSScriptRoot/idf_tools_fallback.py"
+    }
+
+    Write-Output "Setting IDF_PATH: $IDF_PATH"
+    $env:IDF_PATH = $IDF_PATH
+
+    Write-Output "Adding ESP-IDF tools to PATH..."
+    $OLD_PATH = $env:Path.split(";") | Select-Object -Unique # array without duplicates
+    # using idf_tools.py to get $envars_array to set
+    $envars_raw = (python.exe "$IDF_TOOLS_PY_PATH" --tools-json "$IDF_TOOLS_JSON_PATH" export --format key-value)
+    if ($LASTEXITCODE -ne 0) { exit $LASTEXITCODE } # if error
+
+    $envars_array # will be filled like:
+    #               [
+    #                    [vname1, vval1], [vname2, vval2], ...
+    #               ]
+    foreach ($line  in $envars_raw) {
+        $pair = $line.split("=") # split in name, val
+        $var_name = $pair[0].Trim() # trim spaces on the ends of the name
+        $var_val = $pair[1].Trim() # trim spaces on the ends of the val
+        $var_val = $var_val -replace "%(.+)%", "`$env:`$1" # convert var syntax to PS using RegEx
+        $var_val = $ExecutionContext.InvokeCommand.ExpandString($var_val) # expand variables to values
+        $envars_array += (, ($var_name, $var_val))
+    }
+
+    foreach ($pair  in $envars_array) {
+        # setting the values
+        $var_name = $pair[0].Trim() # trim spaces on the ends of the name
+        $var_val = $pair[1].Trim() # trim spaces on the ends of the val
+        Set-Item -Path "Env:$var_name" -Value "$var_val"
+    }
+
+    #Compare Path's OLD vs. NEW
+    $NEW_PATH = $env:Path.split(";") | Select-Object -Unique # array without duplicates
+    $dif_Path = Compare-Object -ReferenceObject $OLD_PATH -DifferenceObject $NEW_PATH -PassThru
+    if ($dif_Path -ne $null) {
+        Write-Output $dif_Path
+    }
+    else {
+        Write-Output "No directories added to PATH:"
+        Write-Output $OLD_PATH
+    }
+
+
+    Write-Output "Checking if Python packages are up to date..."
+
+    Start-Process -Wait -NoNewWindow -FilePath "python" -Args "`"$IDF_PATH/tools/check_python_dependencies.py`""
+    if ($LASTEXITCODE -ne 0) { exit $LASTEXITCODE } # if error
+
+    Write-Output "
+Done! You can now compile ESP-IDF projects.
+Go to the project directory and run:
+    idf.py build
+"
+
+}
diff --git a/tools/windows/tool_setup/idf_setup.iss.inc b/tools/windows/tool_setup/idf_setup.iss.inc
index cfaaec429f..be2611d624 100644
--- a/tools/windows/tool_setup/idf_setup.iss.inc
+++ b/tools/windows/tool_setup/idf_setup.iss.inc
@@ -413,7 +413,38 @@ begin
       GetIDFPath(''),
       '', 0, SW_SHOWNORMAL);
   except
-    MsgBox('Failed to create the Start menu shortcut: ' + Destination, mbError, MB_OK);
+    MsgBox('Failed to create the shortcut: ' + Destination, mbError, MB_OK);
+    RaiseException('Failed to create the shortcut');
+  end;
+end;
+
+procedure CreateIDFPowershellShortcut(LnkString: String);
+var
+  Destination: String;
+  Description: String;
+  Command: String;
+  GitPathWithForwardSlashes: String;
+  PythonPathWithForwardSlashes: String;
+begin
+  ForceDirectories(ExpandConstant(LnkString));
+  Destination := ExpandConstant(LnkString + '\{#IDFPsShortcutFile}');
+  Description := '{#IDFPsShortcutDescription}';
+  GitPathWithForwardSlashes := GitPath;
+  PythonPathWithForwardSlashes := PythonPath;
+  StringChangeEx(GitPathWithForwardSlashes, '\', '/', True);
+  StringChangeEx(PythonPathWithForwardSlashes, '\', '/', True);
+  Command := ExpandConstant('-ExecutionPolicy Bypass -NoExit -File ""{app}\idf_cmd_init.ps1"" ') + '"' + GitPathWithForwardSlashes + '" "' + PythonPathWithForwardSlashes + '"'
+  Log('CreateShellLink Destination=' + Destination + ' Description=' + Description + ' Command=' + Command)
+  try
+    CreateShellLink(
+      Destination,
+      Description,
+      'powershell.exe',
+      Command,
+      GetIDFPath(''),
+      '', 0, SW_SHOWNORMAL);
+  except
+    MsgBox('Failed to create the shortcut: ' + Destination, mbError, MB_OK);
     RaiseException('Failed to create the shortcut');
   end;
 end;
diff --git a/tools/windows/tool_setup/idf_tool_setup.iss b/tools/windows/tool_setup/idf_tool_setup.iss
index 269297ae3b..2a396baf0f 100644
--- a/tools/windows/tool_setup/idf_tool_setup.iss
+++ b/tools/windows/tool_setup/idf_tool_setup.iss
@@ -13,12 +13,17 @@
 #define PythonInstallerName "idf-python-3.9.1-embed-win64.zip"
 #define PythonInstallerDownloadURL "https://dl.espressif.com/dl/idf-python/idf-python-3.9.1-embed-win64.zip"
 
-#define GitVersion "2.21.0"
-#define GitInstallerName "Git-2.21.0-64-bit.exe"
-#define GitInstallerDownloadURL "https://github.com/git-for-windows/git/releases/download/v2.21.0.windows.1/Git-2.21.0-64-bit.exe"
+#define GitVersion "2.28.0"
+#define GitInstallerName "Git-2.28.0-64-bit.exe"
+#define GitInstallerDownloadURL "https://github.com/git-for-windows/git/releases/download/v2.28.0.windows.1/Git-2.28.0-64-bit.exe"
 
-#define IDFCmdExeShortcutDescription "Open ESP-IDF Command Prompt (cmd.exe)"
-#define IDFCmdExeShortcutFile "ESP-IDF Command Prompt (cmd.exe).lnk"
+#define IDFVersionsURL "https://dl.espressif.com/dl/esp-idf/idf_versions.txt"
+
+#define IDFCmdExeShortcutDescription "Open ESP-IDF Command Prompt (cmd.exe) Environment"
+#define IDFCmdExeShortcutFile "ESP-IDF CMD.lnk"
+
+#define IDFPsShortcutDescription "Open ESP-IDF PowerShell Environment"
+#define IDFPsShortcutFile "ESP-IDF PowerShell.lnk"
 
 [Setup]
 ; NOTE: The value of AppId uniquely identifies this application.
@@ -62,6 +67,7 @@ Source: "..\..\idf_tools.py"; DestDir: "{app}"; DestName: "idf_tools_fallback.py
 ; Note: this tools.json matches the requirements of IDF v3.x versions.
 Source: "tools_fallback.json"; DestDir: "{app}"; DestName: "tools_fallback.json"
 Source: "idf_cmd_init.bat"; DestDir: "{app}"
+Source: "idf_cmd_init.ps1"; DestDir: "{app}"
 Source: "dist\*"; DestDir: "{app}\dist"
 ; Helper Python files for sanity check of Python environment - used by system_check_page
 Source: "system_check\system_check_download.py"; Flags: dontcopy
@@ -77,11 +83,15 @@ Type: filesandordirs; Name: "{app}\releases"
 Type: filesandordirs; Name: "{app}\tools"
 Type: filesandordirs; Name: "{app}\python_env"
 Type: files; Name: "{group}\{#IDFCmdExeShortcutFile}"
+Type: files; Name: "{group}\{#IDFPsShortcutFile}"
 Type: files; Name: "{autodesktop}\{#IDFCmdExeShortcutFile}"
+Type: files; Name: "{autodesktop}\{#IDFPsShortcutFile}"
 
 [Tasks]
-Name: createlnk; Description: "Create Start Menu shortcut for the ESP-IDF Tools Command Prompt";
-Name: createdsk; Description: "Create Desktop shortcut for the ESP-IDF Tools Command Prompt";
+Name: CreateLnkStartCmd; Description: "Create Start Menu shortcut for the ESP-IDF Tools Command Prompt Environment";
+Name: CreateLnkStartPs; Description: "Create Start Menu shortcut for the ESP-IDF Tools Powershell Environment";
+Name: CreateLnkDeskCmd; Description: "Create Desktop shortcut for the ESP-IDF Tools Command Prompt Environment";
+Name: CreateLnkDeskPs; Description: "Create Desktop shortcut for the ESP-IDF Tools Powershell Environment";
 ; WD registration checkbox is identified by 'Windows Defender' substring anywhere in its caption, not by the position index in WizardForm.TasksList.Items
 ; Please, keep this in mind when making changes to the item's description - WD checkbox is to be disabled on systems without the Windows Defender installed
 Name: wdexcl; Description: "Register the ESP-IDF Tools executables as Windows Defender exclusions (improves compilation speed, requires elevation)";
@@ -89,7 +99,9 @@ Name: idf_tools_use_mirror; Description: "Use Espressif download server instead
 
 [Run]
 Filename: "{app}\dist\{#GitInstallerName}"; Parameters: "/silent /tasks="""" /norestart"; Description: "Installing Git"; Check: GitInstallRequired
-Filename: "{group}\{#IDFCmdExeShortcutFile}"; Flags: postinstall shellexec; Description: "Run ESP-IDF Command Prompt (cmd.exe)"; Check: InstallationSuccessful
+Filename: "{group}\{#IDFPsShortcutFile}"; Flags: postinstall shellexec unchecked; Description: "Run ESP-IDF PowerShell Environment"; Check: IsPowerShellInstalled
+Filename: "{group}\{#IDFCmdExeShortcutFile}"; Flags: postinstall shellexec unchecked; Description: "Run ESP-IDF Command Prompt Environment"; Check: IsCmdInstalled
+
 
 [UninstallRun]
 Filename: "powershell.exe"; \
diff --git a/tools/windows/tool_setup/main.iss.inc b/tools/windows/tool_setup/main.iss.inc
index 0649d38760..4c78299ce0 100644
--- a/tools/windows/tool_setup/main.iss.inc
+++ b/tools/windows/tool_setup/main.iss.inc
@@ -134,16 +134,26 @@ begin
     IDFToolsSetup();
 
 
-  if WizardIsTaskSelected('createlnk') then
+  if WizardIsTaskSelected('CreateLnkStartCmd') then
   begin
     CreateIDFCommandPromptShortcut('{autostartmenu}\Programs\ESP-IDF');
   end;
 
-  if WizardIsTaskSelected('createdsk') then
+  if WizardIsTaskSelected('CreateLnkStartPs') then
+  begin
+    CreateIDFPowershellShortcut('{autostartmenu}\Programs\ESP-IDF' );
+  end;
+
+  if WizardIsTaskSelected('CreateLnkDeskCmd') then
   begin
     CreateIDFCommandPromptShortcut('{autodesktop}');
   end;
 
+  if WizardIsTaskSelected('CreateLnkDeskPs') then
+  begin
+    CreateIDFPowershellShortcut('{autodesktop}');
+  end;
+
   if WizardIsTaskSelected('wdexcl') then
   begin
     RegisterIDFToolsExecutablesInWD();
@@ -170,3 +180,14 @@ begin
     Result := SetupAborted;
   end;
 end;
+
+
+function IsPowerShellInstalled(): Boolean;
+begin
+  Result := ((not SetupAborted) and (WizardIsTaskSelected('CreateLnkDeskPs') or WizardIsTaskSelected('CreateLnkStartPs')));
+end;
+
+function IsCmdInstalled(): Boolean;
+begin
+  Result := ((not SetupAborted) and (WizardIsTaskSelected('CreateLnkDeskCmd') or WizardIsTaskSelected('CreateLnkStartCmd')));
+end;