Renewable energy continues to be on an all-round growth path with focused policy, regulatory and fiscal support of the current Govt. This has helped the renewable capacity in the country cross an impressive milestone of 200 GW+ till date. We expect the Govt. to continue this focused support to all sectors of this industry in the coming year’s budget also and expect specific focus to certain areas to help gain all-round long-term self-sufficiency across the value chain in it.
Some of the key expectations of the industry from the budget will include:
- In-house technology development
To become self-reliant in any field, in-house cutting-edge technology development and its commercialization is pre-requisite. India has, over the years, proved its leadership position in inhouse development of multiple complex technology fields. With higher renewable energy targets across sectors, a high international dependence across the complete renewable technology value chain must be, therefore, reduced to a minimum. This can only be done by setting up high quality in-house research and design capabilities of the latest order in these fields also. The govt. should immediately start promoting this by providing suitable and strong regulatory & fiscal incentives to set up specialized labs in collaboration with leading international and India research institutions including the likes of IIT’s and other research-oriented bodies. Such a strength will also help us faster indigenize equipment plans for manufacture of various critical components.
- In-house equipment manufacturing capabilities
While focus in creating domestic capacities in cell and module manufacturing has been a very welcome move in recent years, we are still fully dependent on import of equipment for manufacturing of these critical components, from abroad only. India has earned its name in equipment manufacturing in varied field in all these years and it is, therefore, time to start focusing on inhouse manufacturing of all equipment for cell and module lines in India only to help completely ‘Made In India’ status. The budget should provide for required regulatory and fiscal support for the same. This also applies to inhouse manufacturing of critical equipment for green hydrogen like electrolysers, etc.
As per some of the recent estimates, India will need to invest approximately USD 200 Billion + to meet its clean energy initiative targets till 2030. While the domestic industry is fully committed to drive &support in achieving the required energy targets, one of the most driving factors will be availability of required competitively priced funds from a combination of international and domestic institutions having specific focus to renewable energy development. We appreciate that government is working on this field and expect steady reduction in lending costs to industry by putting such projects into in ‘priority sector lending’. Re-introduction of lower TDS rates on Interests on ECBs /Rupee Denominated Bonds will support reduced cost of funding for this industry.
The industry has a long pending request for rationalization of indirect tax-GST, on turbines and modules to be reduced to 5 percent from 12 percent to help improve viability of renewable projects and help reduce tariff for consumers and the industry.
- Considering increasing demand for solar cells and supply demand mismatch in available capacities, government should consider exceeding its target to introduce ALMM for cells for a further period of 5 years. Further rationalisation of import duty structure on solar cells is required to strengthen the industry.
- Concessional Income Tax Rate @ 15 percent should be again brought back in the budget to boost the investments and should be further extended to 5 years to help steady growth of the industry.
- Government should consider excluding renewable energy companies from deemed dividend taxability in case of loan/advances from SPVs to shareholders avoid cash trapping. This will ensure optimum cash utilization within the group.
- Exemption of GST on Corporate Guarantee for renewable energy companies wherein Corporate Guarantee is provided by Holding Company to lenders in respect of funding obtained by SPVs.
- To help industry move to 100 percent RTC green power, economically viable solutions are a key integrator. The Govt. should provide required policy and fiscal incentives to continue Viability Gap Funding for BESS projects. Policy support for major battery ventures via tax breaks and subsidies to boost local production.
- Interstate charges on power transmission through ISTS connectivity are waived till 2025. This should be further extended over the next 5 years to give a steeper boost to C&I segment which has large ISTS opportunities.