HomePolicies & Regulations ›India Inc Evaluates FM Nirmala Sitharaman’s Green Budget 2022 as Growth Oriented

India Inc Evaluates FM Nirmala Sitharaman’s Green Budget 2022 as Growth Oriented

After providing much-awaited clarity on the implementation of the Basic Customs Duty (BCD) on import of solar PV cells and modules from April 01, 2022, proposing additional Rs 19,500 crore outlay for module manufacturing etc, Finance Minister Nirmala Sitharaman, via her Budget, has provided a number of reasons to indigenous PV makers to celebrate.

February 02, 2022. By Manu Tayal

Despite continued disruption from the coronavirus pandemic and rising inflation, Finance Minister Nirmala Sitharaman and her team had tried to choose the path of economic revival by emphasizing the country’s ambitious clean energy goals and ticked all the right boxes. Also, in her 91 minutes Budget speech, she unveiled a Rs 39.45 lakh crore Budget in Parliament for the next financial year with an intent to fire up the key engines of the economy to sustain the fastest recovery, on the back of energy transition and climate action. Thus, FM provides impetus to electric vehicles, solar manufacturing, the blending of fuels, start-ups, green bonds among others.     
After providing much-awaited clarity on the implementation of the Basic Customs Duty (BCD) on the import of solar photovoltaic (PV) cells and modules from April 01, 2022, proposing additional Rs 19,500 crore outlay for module manufacturing etc, Finance Minister Nirmala Sitharaman, via her Budget, has provided a number of reasons to indigenous PV makers to celebrate.

On getting BCD clarity, Avinash Hiranandani, Global CEO & Managing Director, RenewSys India, 1st integrated manufacturer of Solar PV Modules and its key components i.e. Encapsulants, Backsheets, and Solar PV Cells, shared with Energetica India that “The announcement of a Basic Customs Duty of 40% on PV Modules and 25% on PV Cells is a big boost for the Indian solar module manufacturing industry. We welcome this and expect to add capacity in both our businesses - i.e. the PV Encapsulants (EVA& POE), Backsheets, and PV Modules business, in line with the same.”
While putting a case for the MSME companies to get benefit into schemes like PLI and emphasizing the need for defining R&D measures, Bharat Bhut, Co-Founder and Director, Goldi Solar, a Gujarat-based solar panel maker, said that “Implementing 40% BCD on solar modules and the additional allocation of Rs 19,500 crore for PLI for solar PV module manufacturing will ensure the growth of the entire domestic manufacturing ecosystem. The application requirements should be tweaked to ensure that MSMEs also benefit from the scheme. All of these measures will result in a more robust domestic module supply, increased confidence in Indian solar modules and reduced reliance on imports while furthering our aim to achieve an Atmanirbhar Bharat. As a next step, the government needs to define measures to be taken in the R&D space to foster innovation and help companies stay ahead of the technology curve.”
Sharing his analysis on the Budget for the power sector, Sabyasachi Majumdar, Senior Vice President & Group Head - Corporate Ratings, ICRA Limited, one of the leading credit rating agencies, told to Energetica India that, “The budget remains fully aligned to the GoI’s strong policy focus in renewables with an objective to reduce the carbon footprint in the country. The measures to introduce sovereign green bonds for public sector projects will enable CPSUs to meet their funding requirements in renewables in a cost-competitive manner. Increased PLI allocation is likely to result in an incremental investment of about 40 GW in module manufacturing over the medium term. The focus on clean technology in transport & supportive measures for EV adoption remain positive for the renewables sector. Finally, the government’s increased capital expenditure allocation is likely to boost energy demand growth in the country. Moreover, the extension of the timeline for the concession tax regime to March 2024 from March 2023 is positive for the new power generation units.”
While appreciating the Government’s intentions of marching towards its clean energy goals via Budget, Sumant Sinha, Chairman and CEO, ReNew Power, India renewables giant, also emphasized the need that the entire machinery should brace for the faster new capacity addition and said “The Union Budget 2022 lays the groundwork for India’s ambition to be a net-zero country by 2070. It is great to see that the government has very firmly put energy transition and clean energy at the heart of India’s economic growth and looks to address some of the most challenging aspects of this transition.

The additional outlay of Rs 19,500 crore for solar manufacturing will help the renewable industry expand rapidly. We expect IREDA, which has been capitalized recently, to move fast and issue letters of award to companies that have bid under the PLI scheme. The revocation of anti-dumping duty on steel will reduce the cost of modules considerably and ties in well with incentives for locally incorporated manufacturing entities, which can now commence manufacturing by March 31, 2024. This is welcome.

Further, the inclusion of grid storage and dense charging into the harmonized list of infrastructure will help mobility start-ups and IPPs to explore low-cost financing. The fact that states will be allowed a 4% deficit of which 0.5% continues to be reserved for power sector rooms, is a bold move. Further, states now have access to Rs. 1 lakh crore additional capital to catalyse investments in clean energy.

Sovereign green bonds are also very welcome, which can help mobilize financial resources for distribution companies as well as for clean energy investors. With this climate-friendly budget, we look forward with more enthusiasm to work with the government in realizing the net-zero ambition.”
Agreeing with Sumant Sinha on states having more room for investments, Animesh Damani, Managing Partner, Artha Energy Resources, a power generation industry investment advisory firm, shared with Energetica India that “While India is growing significantly in the RE space, one cannot deny the need for power reforms at state levels. The introduction of the 0.5% fiscal deficit incentive mentioned in the 15th Finance Commission is bound to act as a catalyst in state-level power reforms. States such as Rajasthan, Andhra Pradesh, Tamil Nadu, and Uttar Pradesh are most likely to witness significant power reforms.”
By welcoming the Government’s overall Clean Energy Budget, however, remained cautious about the import duty, Adarsh Das, Co-Founder and Chief Executive Officer, SunSource Energy, one of the leading solar energy developers with global footprints, added that “Several important announcements such as an additional allocation of Rs. 19,500 crore for the PLI scheme for module manufacturing, sovereign green bonds for funding solar projects, and a robust battery swapping policy will pave the way for reaching the target of 500 GW of non-fossil energy capacity by 2030 and achieving net-zero by 2070.

Additionally, the move to provide infrastructure status to the data centre and energy storage system will help facilitate cheaper credit for digital infrastructure and clean energy storage.

As an industry, we support the indigenous manufacture of solar modules. The clarity on import duty on solar cells and modules will help the local manufacturing capacity ramp-up to meet both Indian and global demand for solar modules. While the higher duty will increase the cost of setting up solar plants, we believe long-term it would be a net positive for Indian industry and Developers.”
In line with other industry stakeholders, Ranjit Gupta, Managing Director and Chief Executive Officer, Azure Power, India’s one of the leading Independent Power Producers (IPP), termed the Budget announcements positive for the RE industry and added that “The government’s decision for an additional allocation of INR 19,500 crores under the PLI scheme for manufacturing high-efficiency solar PV modules will give a huge fillip to domestic manufacturing and improve the availability of solar modules in the country, thereby ensuring timely project deliveries while creating incremental employment.

The decision to announce a battery swapping policy and inter-operability standards with an emphasis on battery/energy-as-a-service and the decision to assign infrastructure status to energy storage systems will further develop the energy storage technology. It will allow the renewable energy industry to partner with commercial & industrial customers in their decarbonisation journey, standardise battery specifications, and improve EV adoption in the country. The move will also increase grid stability as the share of renewable energy in the energy mix continues to rise and aid in financing for energy storage projects.

We welcome the government’s announcement to issue sovereign green bonds for mobilising resources for green infrastructure. This would help the government in accelerating the electricity grid and other associated energy infrastructure upgrades.

Together these announcements will accelerate India’s progress towards a carbon-neutral future.”
Emphasizing the significance of Distributed Renewable Energy (DRE) in developing the rural economy, Jaideep Mukherji, CEO, Smart Power India, a subsidiary of The Rockefeller Foundation, opined that “Budget 2022 has clearly laid a major focus on the green energy transition, reducing carbon footprint, and inclusive economic growth. As we move towards a greener economy, the role of Distributed Renewable Energy (DRE) as a catalyst in the empowerment of MSMEs, job creation, and reforms in agriculture will be crucial. New initiatives to encourage productive use of clean energy in rural areas driven by DRE can be of great value to the rural as well as the national economy.”
Agreeing with Jaideep Mukherji’s views, Nithyanandam Yuvaraj Dinesh Babu, Team Leader, SUPRABHA - The World Bank SBI Initiative, added that “India’s Budget 2022 has promised many positives for the clean energy sector, both short & long term. Hon’ble FM has proposed transformative measures in the blueprint for Amrit Kaal, under Sunrise Opportunities and Energy Transition and Climate Action. Green bonds, blended finance with 20% government share, infra status for grid-connected storage, PLI for solar modules manufacturing etc., will truly act as a multiplier in leveraging private finance to the much-needed USD 10 trillion investments by India towards achieving Net-Zero by 2070.

Energizing border villages and Saksham Anganwadis through decentralized renewable energy and clean energy respectively also highlights Government of India’s emphasis on accelerating clean energy adoption.”
With a view on expanding the PLI scheme to more products, Jaideep N. Malaviya, Director, International Solar Energy Society, suggested that “The infusion of INR 19,500 crore for Production linked incentive is welcome to make country ‘Atmanirbhar’ instead should be spread across many Renewable Energy manufacturing products dependent on imports and not centric to Solar PV value chain. This will ensure more job opportunities and more prospects for start-ups. For example, India imports annually over 60 lakh evacuated tubes used in Solar Water Heating system.”
On the Finance Minister’s proposal of bringing out Battery Swapping Policy and inter-operability standards, Dr. Rashi Gupta, Founder and Managing Director, Vision Mechatronics, manufacturer of lithium batteries in India, analyzed the Budget as proactive for the battery manufacturing industry and said “A very proactive step in Budget laid by the Hon’ble Finance Minister for Introducing “Battery as a Service and Battery Swapping” which will push the adoption of E-mobility substantially as well as reduce the burden on the grid infrastructure. The standardization committee is working relentlessly to make an interoperable standard and will soon see the light of the day. An Important reform of the classification in the HSN code will make it significantly easier to regulate the Energy storage market. Giving infrastructure status for energy storage will create a great impetus for the industry.”
On behalf of the EV manufacturing industry, Sohinder Gill, Director General, Society of Manufacturers of Electric Vehicles (SMEV), has also welcomed the measures announced in the Budget, by further emphasizing the need for a skilled workforce and added that “The budget for 2022–23 gives a huge impetus to the electric vehicle (EV) industry. Introducing the battery swapping policy and recognizing battery or energy as a service will help to develop EV infrastructure and increase the use of EVs in public transportation. It would motivate businesses engaged in delivery and ride aggregation businesses to incorporate EVs into their fleet. It will create new avenues for companies to venture into the business of battery swapping. Additionally, creating special clean zones will further accelerate the adoption of EVs and spread awareness amongst the citizens. The move will benefit the whole segment, i.e. E2W, E3W, E-cars, and buses.

The budget also provides attention to the need for skilled resources in the industry. Introducing new skill programs in ITI will bridge the skill gap that currently exists in the industry. The industry would be happy to work with the government to devise customized courses to meet the demands of the EV industry.

Overall, the budget aims at strengthening the whole ecosystem of the EV industry, which will spur the demand for green vehicles.”
Agreeing with SMEV’s Sohinder Gill, Uday Narang, Founder and CEO, Omega Seiki Mobility, an Anglian Omega Network company, shared that “An introduction of a Battery Swapping Policy will play a pivotal role in the long-term adoption of Electric Vehicles in India. Interoperability standards across the industry for EVs will be especially beneficial for electric two and three-wheelers. Our recent foray in swappable technology with our flagship product ‘OSM Rage+’ is the first step towards achieving this dream.

The Union Budget 2022 provided the much-needed impetus which would augment our country’s road infrastructure and projects for the Highway network to grow by 25,000 km this fiscal with investments of 20,000 crore as part of Prime Minister’s Gati Shakti Plan for Expressways. This will not only lead to demand for electric vehicles, but also for ancillaries supporting the EV industry. However, the possible increase in import expenditure of certain components may cause some lack of joy among several of our industry peers. Lastly, the announcement on Drone Shakti with the introduction of Drones as a ‘service’, especially for the agriculture sector will help track the lifecycle of crops efficiently. We have already earmarked a Capex of Rs 75 crores towards OSM Drones and at the moment we are in active discussion with several partners for the same.

In all this is a very balanced and growth-oriented, forward-looking budget which will help in the broader economic development of the country, both on micro and macro fronts.”

Stressing on the need for building innovative business models, Venkat Rajaraman, Founder and CEO, Cygni, a Hyderabad-based next-generation energy storage company, commented “Clean mobility as a growing important segment; and keeping energy transition as the backbone, the focus has been on strengthening to enable access to clean energy to power clean mobility. This will help to develop sustainable and innovative business models for batteries and energy as a service to improve the efficiency in the EV ecosystem in India. The announcement of a battery swapping policy and push for cleantech and electric vehicles will certainly benefit the EV segment and vehicle makers in India and will promote the sales of electric vehicles, battery production and development in the country, adding special privilege to the private sector. Adding to it, battery swapping policy and interoperability standards will be implemented to overcome some challenges negatively impacting EV adoption in the country.” 

On the Finance Minister’s proposal of co-firing of 5 to 7 per cent biomass pellets in thermal power plants, Swapnil Kardile, CEO, Rajaram Bioenergy, an exclusive arm of Rajaram Solvex Ltd engaged in the business of manufacturing and marketing of Biomass Pellets and Briquettes - used in various heating applications in Home and Commercial Cooking as well as industrial steam boilers, said that “It was an overall balanced budget without many surprises. It is heartening to see the focus on renewable energy and holistic sustainability across sectors in the Budget 2022 which positions India towards a green future. The use of alternative fuel has been re-emphasized with a specific direction to incorporate 5-7% use of Bio-mass pellets in thermal power plants. This is a welcome move that will accelerate the growth of the biomass industry, in turn gradually reducing dependence on fossil fuels and generating employment. The country has been reeling under the problem of seasonal stubble burning - this positive step will further boost increase of agricultural waste management leading to a cleaner environment.”
Please share! Email Buffer Digg Facebook Google LinkedIn Pinterest Reddit Twitter
If you want to cooperate with us and would like to reuse some of our content,
please contact: contact@energetica-india.net.
Next events
Last interviews
Follow us