Budget 2023: Renewable Energy Industry Wishlist for Finance Minister Nirmala Sitharaman

Despite pandemic shocks and global geopolitical & economic headwinds, World Bank revised India's GDP growth projections to 6.9 per cent from its earlier projection of 6.4 per cent on the back of strong macroeconomic fundamentals of the country. 

India's economy is estimated to continue the upward journey in FY23, as the country is expected to register a growth of 7 per cent along with 15.4 per cent nominal GDP, as per the Ministry of Statistics & Programme Implementation.

Even as the Modi government didn't wait for the Budget to make big bang announcements, the day holds prominence as various stakeholders eagerly wait for Finance Minister Nirmala Sitharaman's stance amidst the pressure of keeping elevated inflation in check, boosting economic growth, job creation, and higher income generation among others.

This year's Budget, which is slated to be tabled in the Parliament on February 01, 2023, comes at a time of India's G20 Presidency offering a significant opportunity for India to gain prominence on the international stage by providing sustainable solutions to pressing global issues.   

Ahead of Finance Minister Nirmala Sitharaman’s Union Budget 2023-24, renewable energy (RE) industry stakeholders eye more relief for ‘Ease of Doing Business’ amidst the global multifaceted challenges.  

The wish list which we gathered from the power industry stakeholders includes – stable long-term policy reforms; favourable green financing; Production Linked Incentive (PLI) scheme for wind and electrolyzer manufacturing sectors; incentives on interest rates; low-cost capital for RE, BESS and Green Hydrogen projects; reduction in GST on ACC batteries and solar & wind equipment sale, expansion of FAME-II & PLI schemes for EVs, increasing use of sustainable fuels, reforms for Discoms and electrical grids, reduction in import duties on raw materials, financing for CBG plants & carbon markets, policies towards biofuel R&D and tax incentives, reward for developing new technologies among others.

Venkatesh R., Managing Director & Director Energy Business, Wärtsilä India 

"Decarbonisation and the fight against climate change is entering a brand-new chapter. India is currently faced with an energy trajectory that includes multiple imperatives: sustainability, energy access across the country and energy self-sufficiency, while most importantly driving and sustaining rapid economic growth.
 
To spearhead the pace of Energy transition plans, certain policy interventions would be needed i.e.
 
⦁    Favourable funding and reforms that will pave the way for India’s switch to renewable energy.
⦁   Promote the use of sustainable fuels in the power sector by mandating minimum consumption requirements.
⦁    Power distribution companies and electrical grids in India must undertake reforms to maintain the country’s notable shift from fossil fuels to more sustainable forms of renewable energy.
⦁    Sector expects provisions to encourage development of storage solutions, specifically battery storage with newer and economical solutions.
⦁   Provide incentives on interest rates for renewable energy sector, especially domestic renewables sector, as the industry is rate-sensitive – interest charges are higher as compared to other parts of the world.

The opportunity for India is immense and could cost effectively leapfrog other developed nations into a sustainable future. As most of its infrastructure is yet to be built and therefore can secure itself with domestically produced green energy with socio-economic benefits."

Maninder Singh, Founder & CEO, CEF Group 

"Renewable energy/biofuels, the government should encourage the infusion of better incentives in the SATAT policy at the central and state levels. Another important factor to consider in the upcoming budget must be CBG plants where finance should be made available for such plants and under specialized and specific government programs which include the Ministry of Oil and Gas, Ministry of New and Renewable Energy as well as the Ministry of Finance. The government should also provide ancillary support for marketing and selling of the by-products from CBG plants and should also consider bringing these plants under the white category of environmental norms."

Mahesh Palashikar, President, GE South Asia

“The upcoming Budget can further accelerate India’s decarbonization journey across multiple pathways, particularly by developing solid financing models across India’s decarbonising efforts and incentivising manufacturing for wind power.

The Union Budget 2023-24 should consider building upon the national manufacturing capability to produce wind turbines and related components. This can be done through allocations such as a production-linked incentive scheme. This will decrease the overall cost of wind power generation, increase India’s importing capability to the world, and enhance adoption. Wind power serves as an important natural source for round-the-clock power generation and can also support the country's ambition to produce green hydrogen. 

Further, the Budget is also an opportunity for large-scale carbon markets and green financing solutions through budgetary allocations aimed at empowering energy producers and providers. This can also include creating a robust framework for both offshore and onshore financing, and incentivizing investors.”

Manish Dabkara, Chairman and MD, EKI Energy Services Ltd

"We are having strong expectations from this years budget in regards to green energy, decentralised energy systems and carbon markets. The budget should provide substantial allocations towards sustainability, growth, manufacturing and investments in the green energy sector leading to a positive movement in our net zero emission goals and overall economic growth. An allocation towards "market sustainable fund" to enhance the valuation of environmental attributes of Indian Carbon Market will encourage industry to proactively make investments towards low carbon technologies and processes. Simultaneously, there needs to be focus on development of technologies for energy security, decentralisation of RE and energy access, and Make in India reforms."

Kishan Karunakaran, Founder and CEO, Buyofuel

“While existing policies provide the appropriate financial and fiscal incentives, advanced biofuels need more thrust from the government. It would be great if biofuel secure a spot in the Union budget. Undoubtedly, the industry is thriving. Hence, formulation of policies towards biofuel research and development, collaborations, consumer awareness by funding for programs on biofuels and their benefits, developing a better storage and distribution network infrastructure, providing tax incentives for biofuel consumers and producers, and finally promoting the growth of biofuel crops among farmers without jeopardizing food security with sector-specific frameworks and monitoring them with set long and short-term roadmap will keep the nation on its pace towards net-zero goals.”

Prateek Kanakia, PhD, Chairman and Founder, TheGreenBillions Ltd

"We must fight climate change with clean energy and from the upcoming budget, we expect to see more actions around climate financing and mobilising more resources by increasing allocation in the Production Linked Incentive (PLI) scheme for boosting the domestic manufacturing of green and sustainable solutions. Steps that will bring the focus on identifying, developing alternative energy sources, mainly green and clean sources that do not harm the environment, are what we need from the upcoming budget."

Naivedya Agarwal, Co-Founder and CEO, Runaya

"Climate change is one of the biggest challenges that we are facing currently. We feel that 2023's budget should take into consideration this aspect with an urgent need. Companies in the manufacturing space should be rewarded for developing new technologies and adopting sustainable business practices. Infrastructure can see a positive momentum in this year's Budget; with ease of doing business supplemented by tax reforms at the centerstage. Simplifying mechanisms like Advance Pricing Agreement, Safe Harbour Rules are foreseeable. Also, we feel that echoing our earlier efforts (in previous Union Budget and the year went by), if we want to continue in our mission to become a hub for global manufacturing, reforms are necessary." 

Inder Bhambra, Country Head, BD and Sales, Envision Energy India

“The industry expects that the upcoming budget will introduce a Production Linked Incentive (PLI) programme for wind turbine manufacturers, which will subsequently increase the output of domestic equipment, thereby lowering the cost of installation. The government should consider treating RECs similar to carbon credits and grant favourable tax on income derived from them. Additionally, the government must take steps to bolster India’s renewable energy capacity by bringing down GST rate on sale of wind and solar equipment. With consistent fiscal support, we are positive that the Indian renewable industry can double its renewable power capacity by 2027.”

Srivatsan Iyer, Global CEO, Hero Future Energies

“In order to meet our RE goals by 2030 and truly compete with regions like US, China and the Middle East on emerging technologies like Green Hydrogen which are aided by access to low-cost capital and extremely favorable Tax and Duty regimes in those countries, the GoI must provide some immediate relief to counter significant cost and schedule disruptions in the wake of the implementation of BCD and ALMM and the global supply chain disruptions. One area would be in the form of deferment of BCD implementation on solar modules and cells, till such time sufficient domestic manufacturing capacity is operationalized to fulfil the annual demand estimated to reach the 2030 targets. Also, parallel measures to reduce the incidence of domestic solar module manufacturers exporting a large portion of their production, leaving the domestic industry without viable alternatives. Another area here would be to ensure access to low-cost capital for RE, BESS and Green Hydrogen project development, in line with most other RE focused regions and economies across the globe. Additionally, measures like rationalization of GST on Solar Power Generating Systems and the O&M of wind and solar projects, tax incentives for residential and commercial Rooftop solar consumers, no capital gain tax on sale of land for wind and solar farms and other associated land reforms will bolster the growth and public support for RE and accelerate the country’s green Transition.”

Mahesh Wagle, Co-founder and CEO, Cybernetik 

"As a leading automation partner in the EV two-wheeler industry, we are expecting a number of benefits from the upcoming budget, including the expansion of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME-II) scheme beyond 2024 and a reduction in GST on ACC (Advanced Chemistry Cell) batteries to be lowered and brought on par with EVs (5 percent). To pave way for the quicker adoption of electric four-wheelers (E4W), financing for commercial EVs and lowering of interest rates for the same would be highly beneficial more than subsidies."


Maxson Lewis, Founder and Managing Director, Magenta Mobility

"The Union Budget 2023-24 comes at a time of inflection. India and the world in general are trying to reinvigorate its economy post Covid and the EV ecosystem is at the cusp of disproportionate growth. India needs the right set of fiscal support to accelerate its recovery. An integrated and clean logistics ecosystem has to be a key component of the Government's vision of a $5 trillion economy.

We expect the budget to extend the Corporate Tax Benefits for Infrastructure companies and reduce the GST from 18% to 12% for the Logistics sector. This GST reduction will go a long way in managing the inverted GST impact ailing the EV logistics sector.

Another key aspect is making finance easy for EVs. This can be done by loan mandate to Govt sector banks and financial institutions. The government can see this as a kick start to a sustainable economy while driving demand for the automotive industry."

Aditya Vikram, Managing Director and CEO, Renon India

"Several benefits, including the continuation of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME-II) scheme beyond 2024 and a reduction in GST, are anticipated by the EV industry (including ancillaries). The central government is considering including imperative incentives to encourage the domestic manufacturers of EVs and Energy Storage Systems (ESS) in the forthcoming Union Budget 2023–24.

Additionally, it is expected that the government may reduce the current import tax, which ranges from 5% to 20%, on a variety of components required to create Lithium-ion batteries. The central government has launched a PLI (Production-Linked Incentive) program for automobiles and auto parts, including electric vehicles, with a budget of INR 25,938 crore to promote EV manufacturing in India. There is an expectation of the next version of PLI Scheme-2 in the industry as well."

Venkat Rajaraman, CEO & Founder, Cygni Energy 

“The EV industry is looking forward to enhanced support for battery manufacturing in India and further reductions in import duties on raw materials as several new deals are expected in 2023 for OEMs and Tier-1 manufacturers. We request government to enhance policy and market collaboration across mobility, energy and real estate sectors. These sectors working in silos will result in sub-optimal outcomes. A joint policy task force across these sectors will accelerate EV adoption and strengthen the business case for efficient electric fleets, effective space management, charging network creation and grid management. It is only when these sectors collaborate that large-scale capital can be attracted to this transition. India to focus on fleet-led adoption and infrastructure build-up. Electrification of commercial fleets (especially in 2W and 3W) can provide the demand signal and scale required to attract manufacturing and R&D investments allowing consumer adoption to follow. Marking down on the schemes, enhancement of FAME-II scope will incorporate battery swapping: There is merit in expanding the scope of FAME-II to accommodate battery swapping for 2Ws and 3Ws. As there is an urgent need to review this scheme from a battery-swapping perspective and EPR online portal is still awaited. This will bring in a lot of transparency in the recycling front and we request that this implementation is fast paced. There is a need to align focus on non-fiscal incentives to maximize impact with limited resources: Instituting Low-Emission Zones (LEZs) in congested urban centres, relaxing day-time municipal entry for electric urban freight and legalizing e-bike taxis are a few policy opportunities that will support early EV adoption without the need to expend resources. Also, enabling access to clean energy to power clean mobility: The transition to electric mobility makes the most sense when it is powered by renewable energy. India must liberalize regulations for charging stations to aggregate demand and procure renewable power.”

Srinivasan Viswanathan, Chief Executive Officer, Vibrant Energy
 
“With the coming budget, we look forward to receiving strong support in duty waivers and indirect tax benefits on renewable energy components like wafers, cells, steel and other commodities for easing supply-side constraints. This support will encourage investors and developers to put in significant investments for meeting Hon’ble PMO’s vision of 500GW of renewables at rates cheaper than fossil fuels. Investment in technologies will remain a constant for the industry to grow and affirm its position as an influential segment.”


Deepak Jain, President, Grew Energy

"The government has shown its commitment for mainstreaming renewable energy by introducing policies such as Production-Linked Incentive Scheme-II (PLI-II). However, when we are talking about developing close to 100GW of solar manufacturing capacity by 2030, we need a much more conducive environment. Domestic content requirement needs to, essentially, be made compulsory for subsidised as well as non-subsidised projects. This will immediately shoot up our growth trajectory. In the Union Budget 2023, the Government can think about centralising solar installation policies which will boost installed renewable energy capacity, in order to achieve the goal of 500GW installed capacity by 2030."

Ishan Chaturvedi, Co-Founder and Director, Vareyn Solar 

“One of the key expectations from the budget is more attention to Solar financing. Currently, there is a major lack of green finance available to the Indian sub-continent as compared to some of the European countries and South-East Asian countries. From the forthcoming budget, the industry is expecting provisions for financial reliefs like loans, subsidies etc.  

The most struggling segment in the solar industry right now is the retail sector. The provision begins at 50 lakh rupees so smaller residential or commercial projects do not get adequate financial help without collateral. Therefore, investment in that could help the widespread acceptance of solar technology. 

Besides, technology-based incentives for emerging technologies like EVs, Green Hydrogen also need to be considered in the budget. These businesses are currently in the nascent stage and provisions in the budget will help these sectors grow.”

Jenender Anand, COO, LML Emotion

“The clarity & Continuation of FAME II subsidy beyond 2024 with clearly specified budgets, since existing 10,000 crores will soon be exhausted. We also need a long-term strategy till 2030 which lays down the rules and ends ambiguity at all levels. Faster resolution of complaints and pendency's in claiming subsidies if any (Specified Turnaround time). The component manufacturers should be encouraged with incentives. The next phase of PLI to be announced & incorporated. A policy indicating Complete ban on cheap imports which play with the safety of human beings. Better logistics arrangements for transportation of vehicles. All states to have their EV policies - Ideally it should be uniform. Export incentives will encourage the export of EVs from India and Stricter penalty on companies will be imposed for not being localized.”

Nitin Kapoor, Managing Director, Saera Electric Auto

"The industry stays optimistic that the government will consider reducing the GST on Advanced Chemistry Cell (ACC) batteries on par with EVs. To further enable a faster penetration of electric vehicles on Indian roads, the government needs to focus on lowering interest rates for EV financing and standardized residual battery value calculation. There is also an imperative requirement to focus on creating awareness about the vehicle scrappage policy to encourage the phasing out of end-of-life vehicles and drive EV sales."
 
Ankit Mittal, Co-founder and CEO, Sheru

“There are three things we would like to see in Budget 2023 which help the EV and energy industries:

1. GST reduction on battery swapping from 18% to 5%. Though EVs are at 5%, having the swapping service at 18% makes it an uneven playing field for the technology.
2. PLI on electronics manufacturing in India. Currently, a lot of the components for EVs are sourced from outside the country. This increases costs while leaving the supply chain vulnerable to shocks.
3. Allocation for grid modernisation. The increased integration of renewable energy requires the grid to be modernised for energy to be moved from places where it's produced to centres of demand.”

Vishal Jain, Co-Founder, Roadcast Technologies 

"The budget will hopefully account for provisions for easy expansion, inclusion and collaboration to streamline logistics, infrastructure and connectivity. The investment in tech innovation along with investment in start-ups with innovative ideas will further help the sector scale. Provisions for easy collaboration between the private and public sectors can also accelerate growth."

Sameer Gupta, Chairman & MD, Jakson Group

“We are specifically hoping that the PLI scheme would be announced for promoting the manufacturing of electrolysers in the country. We need revolutionary reforms and allocations in this budget to fast-track India’s energy transition agenda.”

Bikesh Ogra, MD & CEO, Jakson Green

"We believe a good chunk of the initial outlay should be earmarked towards recent developments to help India localise supply chains as far as electrolyser manufacturing is concerned. We also wish to see more budget allocation for emerging green energy transition sectors, including energy storage, offshore wind, renewable natural gas, & green hydrogen."

Dinesh Patidar, Chairman and Managing Director, Shakti Pumps

"To meet the goal of using non-fossil fuel power, solar will continue to play a significant role. Tax holidays should be provided to increase the ease of doing business for this technologically intensive industry. The government could also consider allowing the availment of credit or reducing the GST rates for the supply of raw materials used in the manufacturing of solar products. A major focus of the Budget will be to encourage the manufacturing of domestically produced cost-effective solar modules and a relief in GST for the R&D products required for the development could go a long way in establishing sufficient infrastructure for research and development that meets global standards at competitive prices. We believe that the government will offer concessional import duties on solar modules, which could defeat Atmanirbhar Bharat's purpose of import substitution.
 
The PM-KUSUM scheme is a significant initiative for solarization that focuses on farmers who hold the majority of the market share for solar pumps. In the future, we anticipate the availability of financing options for farmers in the form of formal credit to cover costs that are not subject to subsidies, the adoption of the proper pricing model to effectively expand the installation to remote areas, and the streamlining of administrative procedures."

Lalit Singh, Chief Growth Officer, TelioEV

"The advanced chemistry cell (ACC) battery market anticipate that the GST will be reduced and brought into line with that of EVs (5 percent). In its pre-Budget proposals, the industry organization suggested a constant GST rate of 5% on spare parts for electric vehicles. The government must take commercial EV funding into account to enable quick adoption in the E4W category. We demand reduced interest rates for EV finance rather than subsidies and standardized residual battery value calculation, an extension of FAME-II."

Bharat Bhut, Co-Founder & Director of Goldi Solar

"This year's Union Budget will have a significant impact on how the Renewable Sector growth momentum will be in the coming FY. In the last couple of years; the government has rolled out several policies that were crucial for the growth and adoption of clean energy in the country. The Indian Manufacturers are keenly looking forward to stability, alignment and consistency in these policies, which will eventually encourage much-needed technology innovation and scale up the production capacity to meet the PM's Vision of 'Make In India'. Additionally, incentive policies to promote solar exports will help India increase its share in the booming global solar markets."

Inderveer Singh, Founder & CEO, EVage 

“The government needs to consider commercial EV financing a game-changer to enable lightning-quick adoption in the 4W category. Instead of subsidies, we need to lower interest rates for EV financing and standardize residual battery value calculation. Fleet owners will significantly benefit from the clearance of these hurdles.

On the side of innovation, Government needs to take cognizance of the drivers of true innovation in the EV sector - the startups - and create a level playing field for them in their incentive schemes, access to funding and financing and government fleet electrification projects as well. Adding EVs as a priority sector lending (PSL) category could be a solid interim step to encourage fleet owners to choose electric. Because most state EV policies and frameworks do not include 4W considerations or fast-charging infrastructure guidelines, there needs to be a swift revamp in 2023 to galvanize the sector and make it the inflection point for commercial EVs in India.”