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RE Industry Seeks Policy Boost, Financial Incentives Ahead of Union Budget 2024-25

The introduction of strong incentives for research and technical advancement, improved access to affordable finance, and a decrease in the GST rates on renewable energy components are among the main goals.

July 09, 2024. By Abha Rustagi

The renewable energy sector is keeping its hopes high as Union Finance Minister Nirmala Sitharaman is all set to present the Union Budget 2024-25 on 23 July.

The renewable energy sector is requesting actions to expedite the approval process, lower expenses, and draw large capital inflows. The introduction of strong incentives for research and technical advancement, improved access to affordable finance, and a decrease in the GST rates on renewable energy components are among the main goals.

In order to increase local manufacturing capacity and build vital infrastructure, such as transmission lines specifically designated for the evacuation of renewable energy, there is a significant demand for strategic support. To guarantee a consistent and effective supply of energy, the industry is also seeking more investment in grid integration and energy storage technologies.  

Here's what the industry leaders expect:

Neerav Nanavaty, CEO at BluPine Energy said, “We call upon the government to significantly boost support for the renewable sector, pivotal for driving innovation and ensuring efficient project execution. A skilled workforce is crucial to meet escalating demands and push technological boundaries forward. Seamless integration of renewable sources into a resilient grid infrastructure will enhance national reliability and resilience. Robust regulations for C&I sector will not only attract investments but also streamline operations, fostering sustainable growth. We expect increased support in the solar sector through adequate funding and favourable policies, essential for driving innovation and expanding clean energy deployment. Despite challenges such as high initial costs and regulatory complexities, robust incentives and streamlined processes are imperative to make solar power more accessible and affordable. This strategic focus will propel India towards a brighter, greener future, reinforcing our global leadership in clean energy innovation and sustainability.”

Amit Jain, Global CEO, Sterling and Wilson Renewable Energy commented, "The green energy sector is witnessing a paradigm shift, driven by strategic government initiatives and innovative financial instruments. The Production Linked Incentive (PLI) schemes aim to boost domestic manufacturing and create a competitive edge for Indian companies in the coming years. This initiative alone could create numerous jobs and drive technological innovation. We hope that the government will revise the GST rates for renewable energy components, reducing it to 5 percent (from the current 18 percent), thereby significantly lowering the cost structure for green energy projects. This will also increase the affordability and attractiveness of renewable energy investments, promoting faster adoption across the country. Higher capital expenditure, evidenced by the government's plan to invest over USD 360 billion in renewable energy infrastructure by 2030, highlights the commitment to expanding the country’s renewable energy mix and enhancing grid capabilities. Moreover, lower interest rates have facilitated more accessible financing options, helping to decrease the cost of capital and making large-scale renewable projects more viable. Green bonds have emerged as a powerful tool, with India issuing over USD 21 billion in green bonds as of February 2023. These bonds are crucial for financing environmentally sustainable projects, aligning investor interests with the global push towards a low-carbon economy. Together, these measures will create a robust and supportive environment for the renewable energy sector, positioning India as a global leader in sustainable energy solutions and driving us closer to our goal of a resilient, green future."

Chandra Kishore Thakur, CEO - Asia, Africa, LATAM and Europe, Sterling and Wilson Renewable Energy remarked, “The Solar Power sector holds high expectations from the upcoming Union Government budget to support and accelerate the growth of renewable energy in India. Key areas of focus include the development of large-scale solar parks and ultra-mega solar power projects, necessitating streamlined approval processes and a single-window clearance system to simplify land acquisition. Access to low-cost finance is crucial, and we hope the government introduces or enhances low-interest loans and financing schemes to aid Solar Power Developers and EPC Contractors. Accelerated grid integration, with a focus on enhancing Substations and Transmission line capacities, is vital to match the renewable power capacity addition plan of 500 GW by 2030. It will also ensure grid stability with the inclusion of energy storage capacity. Tax rationalization, such as reducing GST on solar components and BCD on PV modules and cells, will be instrumental in ensuring the availability of essential modules until domestic supplies are sufficient. Promoting public-private partnerships (PPPs) will help combine resources and expertise to boost the development and execution of solar projects. Another pertinent factor is the enhancement of manufacturing capacity for critical equipment like transformers, inverters, and HT panels. This will help in bridging the demand and supply gap. We advocate for capital subsidies and tax breaks to reduce the cost of setting up manufacturing facilities in India. Furthermore, extending the ALMM deadline is essential until domestic manufacturing capacity can meet volume and quality requirements. Overall, we believe that these measures will significantly contribute to the rapid and sustainable growth of the solar power sector in India."

Udit Garg, CEO and Director, Kundan Green Energy emphasised, “As India enters the next phase of its growth trajectory, its energy demand set to grow exponentially – about 335 GW by 2029-’30. The fact that energy demand is outstripping supply can be gauged by the plant load factor of thermal plants. This measure of capacity utilization went up from 71 percent last year to 76 percent in January 2024. The coal-fired energy addition has been set very high at 80 GWs (claimed by the Government as under construction) because there is unsatisfactory renewable energy generation. While tenders have exceeded targets in green energy, we have a long way to go ---- we must add about 40 GWs annually in green energy until 2030 while we are clocking a mere 10 GWs per year. We should see this in the sharp paradoxical juxtaposition of the fact that India is committed to net zero by 2070, is accelerating thermal power generation, has slow and below-target renewable energy addition, and is increasing its energy demand rapidly. Clearly, the answer lies in disproportionately increasing green energy generation. The sector must see an exponential increase in investments. I hope the forthcoming Union Budget would facilitate the ecosystem for this. With a robust investment inflow enabled by policy stimulus, the sector can add 50-60 GW annually from the present 10 GWs to 15 GWs. Higher loan capital is vital for this. With financial infrastructure and a streamlining of land acquisition, I am confident of incremental market depth and scope which has a direct bearing on the sector. Besides this, an often overlooked area which we should consider is dedicated transmission corridors along the lies of the Green Energy Corridor (GEC) for renewable power evacuation. This will go a long way in addressing power evacuation issues faced by hydropower developers, especially in the northeast. While there are several suggestions for the Government to consider, these are amongst the most topical.”

Shashank Sharma, Founder, Chairman and CEO, Sunsure Energy Pvt. Ltd. added, “Given the serious crisis of climate change, we all need to work together to mitigate it in a sustainable manner. We hope to receive continued support and increased fiscal priority.  As with recent budgets, this year too we expect significant Investment in robust grid infrastructure and promoting energy storage solutions as these will be vital to ensure a reliable and efficient energy supply system. We would like to see more incentives for businesses and corporates to decarbonize India's industrial landscape. Moreover, it is vital to prepare energy-intensive industries like cement and steel for the transition phase of the Carbon Border Adjustment Mechanism (CBAM). The upcoming budget should also address the need for skill development programs to create a workforce capable of supporting the renewable energy sector. Training for new green jobs and reskilling of workers from conventional energy sectors will be essential for a smooth transition.”

Kishan Karunakaran, CEO of Buyofuel said, "As we anticipate the unveiling of the upcoming budget, we are hopeful for robust support and strategic initiatives from the newly formed government in the biofuel sector. We expect clear policy frameworks, incentives for research and development, and investment incentives to accelerate the adoption of sustainable biofuels. This will not only bolster energy security but also contribute significantly to environmental sustainability and economic growth. We look forward to collaborative efforts between the government and industry stakeholders to unlock the full potential of biofuels in India's energy landscape."

Varun Puri, Managing Director, Green Power International noted, “As we aim to achieve Net Zero emissions by 2070, we must accelerate our efforts and maintain a steadfast focus on our targets. Strategic planning is essential to meet these goals on time. The government has made significant strides in this direction, demonstrating its commitment to sustainable growth. From increasing budget allocations to supporting emerging technologies such as green hydrogen, each step drives us closer to our visionary goals. Investments are necessary to fund R&D to produce hydrogen with relatively coarse water quality, ideally close to seawater. This would allow the most efficient use of one of the most abundant natural resources i.e., water. To address carbon emissions, we must concentrate on other sectors that significantly contribute to emissions and promote sustainable development. Incentivising carbon capture and utilisation is one viable approach, as carbon capture presents a powerful solution until hydrogen costs decrease with scaling. In this Union Budget, we anticipate a strong policy framework to facilitate efficient growth and subsidies to encourage businesses to adopt emerging eco-friendly practices.”

Aditi Balbir, Co-founder, EcoRatings remarked, "The 2024 union budget should prioritize investments in sustainable infrastructure projects and clean energy solutions as  70 percent of greenhouse gas emissions stem from energy, industry, and buildings . This will create a future-proof foundation for economic growth and help in achieving netzero targets. Infrastructure is crucial in addressing climate change and meeting diverse societal needs. A transformative overhaul of our current and future infrastructure assets is essential. Globally, 85 percent of institutional investors incorporate ESG factors into their investment decisions, making ESG investments the emerging norm. The Union Budget should extend industry recognition programs to companies excelling in sustainability. This will encourage wider adoption and foster a more responsible business landscape beyond the financial sector."

Tanmoy Duari, CEO of AXITEC Energy India said, "We are optimistic about the budget. As a leading solar module manufacturer in India, Axitec is thrilled about the significant strides the government is making towards promoting renewable energy. Finance Minister Nirmala Sitharaman's upcoming Union Budget 2024 presents a pivotal opportunity to boost the solar energy sector further. One of the major expectations from the Union Budget 2024 is the rationalization of the Goods and Services Tax (GST) on solar equipment. Axitec is optimistic about the potential developments in the Union Budget 2024 and looks forward to the government's continued support in making solar energy a cornerstone of India's energy landscape."

Sharad Pungalia, MD and CEO of Amplus Solar added, “In anticipation of the Union Budget 2024, we urge the government to support solar projects by alleviating the existing tax burden on project costs, especially now that the Approved List of Models and Manufacturers (ALMM) has been fully implemented. There must be rationalization of GST across all components of the solar sector, and the government should consider eliminating the Basic Customs Duty (BCD) on solar modules. Furthermore, implementing concessional duties on Battery Energy Storage Systems (BESS) is crucial to advancing our storage capabilities and ensuring a stable and reliable energy supply. Another critical step this budget can take is to facilitate increased credit access for Micro, Small, and Medium Enterprises (MSMEs) through targeted lending by financial institutions. MSMEs represent a significant demand sector, particularly for rooftop and residential solar projects. By integrating them more comprehensively into the financial system, we can significantly boost capacity additions and drive growth within the solar sector. Additionally, significant increase in budget allocations for evacuation infrastructure is required to ensure efficient transmission and distribution of renewable energy. This will not only bolster our green energy capacity but also support the nation's broader economic and environmental objectives.”

Anmol Singh Jaggi, Chairman and Managing Director, Gensol Engineering Limited said, "As India’s energy demand rises, boosting the share of renewables is crucial for energy security and sustainability, the upcoming union budget is expected to focus on achieving the 500GW target by 2030 and incentivizing technologies to reduce renewable energy intermittency, like energy storage solutions. Battery Energy Storage Systems (BESS) are essential for advancing India’s renewable goals. Previous budgets have significantly increased funding for the advanced chemistry cell sector, showing the government's commitment to energy storage. We anticipate continued support for cell manufacturing and BESS, along with Production Linked Incentives (PLI) for raw material processing. Additionally, growing the green hydrogen industry will likely be a key focus, replacing fossil fuels in transportation and hard-to-abate sectors like refining, steel, and cement. At Gensol Engineering, we are dedicated to reducing carbon emissions and combating climate change through the engineering, design, development, and deployment of solar and BESS projects. By providing comprehensive EPC and O&M services , we aim to lead in renewable energy and support India’s energy transition goals."

Capt. Ishver Dholakiya, Founder and MD, Goldi Solar noted, “With climate change as one of the key global concerns, we believe the green energy charter will be on priority in the upcoming union budget 2024 as India currently at 150 GW has set an ambitious target of achieving a renewable energy capacity of 500 GW by 2030. Further, with a focus on ‘Make in India’, and improving ease of doing business, India has become one of the preferred destinations for global companies and is on the road to becoming the third-largest economy in the world with a GDP of USD 5 trillion making green energy a top focus to achieve its Net Zero goals. To further shape the renewable energy sector, the government must focus on large-scale investments in domestic solar panels and component manufacturing facilities. This will not only shorten supply chains and reduce dependency on imports, but also create a cost-competitive advantage. Introducing new skill development programs, incentives, funding, import duties, subsidies, and crafting favourable policies that can boost R&D and innovation will further bolster the sector.

Samarth Kholkar, CEO and Co-Founder, BLive commented, "As we approach the upcoming union budget in July 2024, we have high expectations from the government, so that there are policies that can significantly drive the adoption of electric vehicles across India. To truly accelerate India's shift towards electric mobility, we need a robust government policy that can incentivize both manufacturers, individuals, as well as the larger ecosystem. This includes subsidies, tax benefits, lower GST rates for EVs and making EVs more accessible to the larger public. Equally important is the development of a widespread and reliable charging infrastructure. We urge the government to invest in expanding this network, particularly in urban areas and also along the highways. This will address the range anxiety issue that many potential EV buyers face. Additionally, better financing options are crucial to support consumers in making the switch to electric vehicles. Affordable loans and flexible financing schemes can make EVs a viable option for a larger segment of the population. Finally, we must also consider the resale market of electric vehicles. Establishing a strong resale market with standardized valuation models will enhance the customer confidence and support the long-term adoption of electric vehicles. In these areas, we can pave the way for a greener and a more sustainable future in India."

Saurabh Kumar, Vice President- India,  Global Energy Alliance for People and Planet (GEAPP) said, "For the Union Budget 2024, we anticipate a significant boost to the clean energy sector, building on the government's commendable efforts over the past decade. There is a need for substantial increase in allocations towards scaling-up decentralised renewables and battery storage. Recognizing that an effective energy transition requires seamless inter-ministerial coordination, it is essential that the government implements robust institutional arrangements to expedite this transition at the state level, possibly through a dedicated commission. We hope the government will introduce comprehensive policies and packages designed to accelerate energy transition initiatives at both central and state levels. Equally crucial is the creation of institutional mechanisms that mandate and encourage states to adopt and advance these transitions. We look forward to seeing decisive measures and substantial financial commitments that will drive a swift and thorough energy transition across the nation."

Aryaman Tandon, Managing Partner, Mobility, Energy, and Transportation, Co-Founder, Praxis Global Alliance remarked, "The Electric Vehicle (EV) market in India, though still in its early stages, has seen significant growth, driven by multiple government initiatives. These include tax incentives for EV owners, the establishment of public charging infrastructure, the PLI scheme for local manufacturing, and incentives under the FAME I and II schemes. The FAME II scheme alone supported the sale of over 1.4 million electric two-wheelers (e2Ws), 175,000 electric three-wheelers (e3Ws), and 20,000 electric four-wheelers (e4Ws), increasing EV penetration to over 5 percent for e2Ws and 2 percent for e4Ws. To reach its ambitious target of 30 percent EV penetration by 2030, continued government support is essential. As EV manufacturers invest heavily in research and development to reduce costs, government assistance is needed to make EVs more affordable and narrow the price gap with internal combustion engine (ICE) vehicles. The industry also hopes that the FAME scheme will expand to include private buses and commercial vehicles (CVs), which have so far been limited to State Transport Undertakings (STUs). Reducing customs duties on imported EV components as well as supporting local R&D in battery technology and other fields, as seen in the last budget, will further accelerate local manufacturing and create jobs. Additionally, subsidizing EV financing and simplifying the GST structure on EV components and batteries will reduce costs and make EVs more accessible to consumers."

Kishor Patil, HVAC and Transport, India & SAARC Country Leader, Trane Technologies India stated, "India's global recognition for its climate initiatives presents an exciting opportunity in the upcoming union budget 2024. To further empower our climate warriors, the government can introduce favorable policies and reforms for companies actively working towards the panchamrita strategy (pro-climate initiatives). This initiative could include incentivise for developing and deploying energy-efficient HVAC solutions that reduce HFC usage and support the 2047 target. Additionally, acknowledging buildings that achieve significant reductions in energy consumption and improved indoor air quality would be a significant step forward. Such initiatives have been shown to improve public health in urban areas worldwide. As India strengthens its domestic supply chain model, Budget 2024-25 can introduce measures to enhance cold chain infrastructure. This will directly support the national immunization program and align with the government's goal of boosting agricultural income by minimizing food spoilage. Investments in efficient cold chain technologies will ensure the viability of fresh produce, medicines, and vaccines across the nation."

Mahesh Girdhar, Managing Director and CEO – EverEnviro Resource Management Pvt. Ltd. remarked, “We anticipate robust growth for the adoption of alternative fuels on the back of governmental reforms and push for infrastructure development. Gradually increasing biogas and biomethane consumption to 20 percent by 2030 and replacing natural gas could help India reduce its fossil fuel dependence and cut import bills by nearly USD 29 billion. A crucial step will be to secure guaranteed offtake of CBG by various natural gas-consuming industries to accelerate the achievement of decarbonization goals. Setting up a grid system framework, similar to solar, would enable CBG production in one location and off-take in another, while preserving the molecule's green properties. We believe that focusing on carbon credit trading will draw more investments into CBG projects, providing much-needed cash flow for the sector. Further, a CBG Fertilizer Synchronization scheme, requiring fertilizer units to use CBG, would greatly support the industry, akin to the CBG CGD Synchronization initiative.”

Deepak Sharma, MD and CEO, Zone President, Greater India, Schneider Electric added, “India's economy is projected to grow at ~6.8 percent in FY25, surpassing other major global economies. This is a testament to the country's resilience amidst global uncertainties. With the upcoming union budget, we expect the government to harness the potential of manufacturing, create copious employment opportunities, and expand economic activity that will give further impetus to the current growth momentum. By focusing on self-reliance and resilience in global value chains, India can accelerate its growth trajectory towards being a Global Hub for Manufacturing and Innovation, thereby propelling the nation towards becoming a USD 7 trillion economy by 2030. Continued emphasis on infrastructure development—including roads, railways, ports, and digital infrastructure—will be crucial to enhancing connectivity while also stimulating economic progress across the country. Additionally, we look forward to initiatives that will bolster the new energy landscape including green hydrogen, solar technologies, microgrids, and electric vehicles. We also expect the budget to introduce policies incentivizing energy-efficient practices among companies. This will not only transform India's energy landscape but also contribute significantly towards achieving the country's net-zero goals and climate targets.”

Pratik Agarwal, MD Sterlite Power and Chairman Serentica Renewables noted, "As Prime Minister Modi embarks on his historic third term, I am eager to witness the Government's continued commitment to advancing India's clean energy transition. I extend my congratulations to the Ministry for their commendable efforts over the past five years, particularly in championing policy initiatives that promoted round the clock green power and advancing transmission development through green energy corridors. Looking forward, there are crucial expectations for the power sector. I hope this term focuses on achieving a comprehensive turnaround of discoms. Many initiatives have been taken in the past to incrementally improve the situation, but we expect strong steps in this direction to ensure the sector's well-being. Pushing for full retail competition should be a focus.To maintain the momentum built in the last 5 years, it'll be paramount to extend full ISTS waiver for another 2 years for sustaining RE adoption by all categories of power consumers."

Preeti Bajaj, MD and CEO, Luminous Power Technologies said, “The budget should continue to focus on making India self-reliant and bolstering the Make-in-India initiative. We expect policies to boost local manufacturing and promote energy transitioning technologies, particularly solar energy adoption, to help achieve net-zero goals. We also expect policy measures to strengthen the energy storage systems. We have already started making remarkable strides in achieving the renewable energy goals. To keep up with this momentum, we hope the government can build a dedicated financial support system to encourage the growth of the circular economy supported by the supply chain for the consistent adoption of solar energy solutions. Favourable policy measures to drive R&D and strengthen the Indigenous value chain will act as a major stimulus to private players driving their business on innovative technologies. This step will be an enabler to harness the potential of clean energy. PM Surya Ghar Muft Bijli Yojana, a path-breaking initiative by the government has witnessed a remarkable response towards adopting rooftop solar as a power source and is poised to contribute to a better planet and a sustainable future."

Sumant Sinha, Chairman and CEO, ReNew emphasised, "India stands poised at the brink of a renewables revolution, harnessing the power of its abundant solar and wind resources to lead a sustainable future. To tap its full potential, it is crucial to strengthen the manufacturing ecosystem for clean energy components, provide robust financing support to new technologies, establish new trade agreements with key global regions, and capitalize on the opportunity for India to become a global hub for RE technology, Green Hydrogen & related services. With the upcoming budget, we request the government to prioritize three measures – a package of production and export promotion incentives to our export-oriented sectors like green hydrogen and solar components manufacturing; the launch of a new Carbon Mission to synergise our current efforts, and classification of renewable energy projects with a capacity of more than 50 MW as projects of national importance under the PM Gati Shakti. Furthermore, we request for a uniform GST rate of 5 percent on Battery Energy Storage Systems (BESS) and related components and a reduction in customs duty on batteries for utility storage purposes.These measures will significantly support the growth of the renewable energy sector in the country. The industry is committed to supporting the government in achieving these goals, driving India's growth, and establishing the country as a leader in renewable energy. With bold initiatives and innovation, India is sure to transform into a global leader in clean energy.”

Amit Raj Singh, Founder and MD, Gemopai said, "As 2024 approaches, we expect strategic budget allocation to sustain our dedication to sustainable mobility. The importance of innovation and its effects on people should be emphasized in the Budget. It should represent real progress because it nurtures talent, participates in the community, and encourages responsible growth. Together, we can build a future in which humankind and technology both contribute to positive change. The expansion of the EV industry has been greatly aided by the FAME subsidy. It is essential to continue this subsidy because it helps consumers and encourages the use of electric vehicles. Support from the government can encourage manufacturers to innovate and increase consumer interest in EVs. India can move closer to a future of electric and sustainable mobility if these policies are upheld."

India's renewable sector is at a critical juncture with industry leaders expecting a strong push to be provided in the form of robust policies and incentives for technology upgradation, financial accessibility, and regulations streamlining among others through the upcoming Union Budget 2024-25.

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