India’s Union Budget 2024-25 marks a significant stride towards the nation’s sustainable development and energy transition goals. This year’s fiscal road map places a strong emphasis on green energy initiatives, critical minerals and support for industries transitioning to cleaner technologies. The budget introduces several key measures aimed at boosting the renewable energy sector, with a particular focus on solar power. The ambitious PM Surya Ghar Muft Bijli Yojana, targeting rooftop solar installations for 10 million households, stands out as a flagship programme. Additionally, the government has allocated substantial funds for solar projects and announced policies to promote energy storage solutions, recognising the need for grid stability as renewable energy integration increases. Furthermore, in a move that could significantly impact the electric vehicle (EV) and battery storage industries, the budget proposes full exemption of customs duties on 25 critical minerals. This decision, coupled with the introduction of the Critical Mineral Mission, is expected to strengthen India’s position in the global supply chain for these essential resources. The budget also outlines plans for advancing nuclear energy, improving efficiency in thermal power plants and supporting the transition of “hard-to-abate” industries towards lower emissions. Renewable Watch provides edited excerpts of budget reactions by industry executives working in the renewable energy sector…
Gyanesh Chaudhary
This budget is a catalyst for the growth of the Indian solar industry, empowering millions of households with access to affordable and clean electricity. Moreover, by supporting ancillary sectors like pumped storage and creating a conducive environment for innovation through tax incentives for solar cell and panel manufacturing, the budget has laid a robust foundation for India’s energy transition.
Sameer Gupta
The budget is a major milestone for the nation, fostering economic growth, infrastructure development and energy independence. Special attention has been given to micro, small and medium enterprises (MSMEs) and manufacturing. The support includes a credit guarantee scheme, term loans for machinery and technology financing packages. These measures will help MSMEs scale up and enhance competitiveness. The budget also prioritises infrastructure development with long-term interest-free loans to states and significant project allocations, enhancing connectivity, economic activity and the overall quality of life across the nation. Additionally, the simplified rules for foreign direct investment and overseas investment will open new avenues for global expansion, attract international investments and enhance our global footprint. These measures will advance the renewables sector and help combat climate change.
S.K. Gupta
The current budget reflects the government’s continued focus on energy transition through additional initiatives such as:
- Launch of the PM Surya Ghar Muft Bijli Yojana, which since its announcement in the interim budget, has received remarkable response, and will help facilitate larger penetration of renewable energy for household use.
- The policy for promoting pumped storage projects will boost renewable energy penetration through storage integration.
- The road map for moving from energy efficiency to emission reduction targets will help in promoting renewable power. Financial support to MSMEs for transitioning to cleaner energy will further promote the uptake of renewable energy in the industrial sectors.
- Developing a taxonomy for climate finance to enhance the availability of capital for climate adaptation and mitigation is a welcome step. We expect the government to come out with detailed guidelines on the matter.
- Exemption of customs duty on the import of specified equipment for the manufacture of solar cells and modules is a welcome step and will help further promote domestic manufacturing in the country.
- Customs duty exemptions on the import of lithium and other related chemicals will promote battery storage solutions, enabling better integration for providing round-the-clock power.
While the above policy framework is a welcome move, the industry will benefit immensely if the following demands are met through suitable amendments in the budgetary provisions:
- Classifying the renewable industry as part of priority sector lending and making project finance available at very competitive rates for renewable projects.
- Rationalisation of indirect tax/GST rates on turbines and modules to be 5 per cent each against the existing 12 per cent.
- Exemption of the Approved List of Models and Manufacturers for corporate and industrial projects.
- Need for greater push to developing and promoting domestic research and development facilities for the latest technologies in cell and module manufacturing, as well as their backward integration. In addition, promoting the domestic manufacturing of capital goods for the industry is crucial to avoid reliance on imports from other countries.
- In a bid to provide clean energy at competitive rates, we request the government to reconsider extending concessional tax rates for new projects for a further period of two years.
Vikram Handa
Overall, the Union Budget presents positive measures for various industries. For the battery sector specifically, the government’s proposal to fully exempt customs duty on critical minerals like lithium and nickel will benefit industries in the EV battery supply chain in the short term. However, more needs to be done to develop the cathode and anode manufacturing factories in India to further the development of the EV ecosystem. To promote the EV ecosystem, the Indian government has been facilitating bilateral talks with several countries over the past two to three years for acquiring critical mineral mines. It is imperative to focus on the end users of critical minerals, which are not battery factories but processing companies that manufacture anodes, cathodes and electrolytes. These companies need to be incentivised so they can further invest in domestic and foreign critical mineral assets.
Ammu Susanna Jacob
To integrate more renewable energy into the grid, the Union Budget focuses on long-duration discharge storage that is readily available in the country, specifically pumped hydro. Pumped hydro storage is the most cost-effective long-term storage option due to its longevity and extended discharge duration. “A policy for promoting pumped storage projects will be brought out for electricity storage . . .” is a welcome statement from the finance minister as it allows for the seamless integration of renewable energy into the grid and its effective management. Following the announcement of the pumped hydro policy in April 2023, we have seen a surge in the number of pumped hydro projects being announced and progressing through various stages of development. Now that the new policy is in place, pumped storage plants will deliver even greater benefits, enhancing their capacity to support the grid and integrating renewable energy sources more effectively.
Amit Paithankar
The exemption of customs duties on 25 critical minerals and the reduction of duties on two others will boost resource efficiency and high-tech manufacturing in the solar sector. The expansion of the list of exempted capital goods for solar manufacturing will further strengthen the country’s ability to enhance domestic production capabilities, reducing reliance on imports and fostering self-reliance. Additionally, guidelines for energy efficiency and emission targets for hard-to-abate industries will reduce India’s carbon footprint. Moreover, the support announced for pumped storage projects is critical for maintaining grid stability and ensuring round-the-clock energy availability. The government’s initiative to develop a taxonomy for clients to enhance the availability of capital for climate adaptation and mitigation is another noteworthy initiative. This will facilitate the achievement of the country’s climate commitments and green energy transition goals, providing the financial backbone necessary for sustainable progress. Particularly, the government’s collaboration with private firms to develop small modular reactors and advance nuclear energy technologies signifies a step towards a diverse energy mix for Viksit Bharat. Overall, these initiatives are expected to provide a robust foundation for us to leverage strategic opportunities, enhance capabilities and drive India’s emergence as a global leader in sustainable energy solutions.
Visweswara Reddy
As anticipated, the Union Budget highlights the priority given to the solar and renewable energy sectors. Notably, the PM Surya Ghar Muft Bijli Yojana, which aims to install 10 million rooftop solar panels, stands out as a significant advancement. This initiative could greatly benefit India’s solar PV module manufacturers. Furthermore, removing solar glass, glass and copper wire connectors from the customs duty exemption list is a prudent measure. This decision is crucial to support the burgeoning domestic industry. Nevertheless, additional efforts are needed to accelerate the full development of manufacturing capabilities across the entire process (from polysilicon manufacturing to module assembly), which requires urgent support in areas such as labour regulations, technology imports, land and infrastructure. Swift action on these fronts is essential for India to meet its ambitious domestic production targets amidst numerous ongoing projects.
Tarun Sawhney
In the budget, the government has laid out a comprehensive road map for Viksit Bharat, focusing on key areas such as agriculture, manufacturing and energy security. The increased focus on climate finance and tools such as carbon credits will accelerate the green transition by improving the viability of the bioenergy sector. We also commend the government’s new scheme aimed at incentivising additional employment in the manufacturing sector. This forward-thinking strategy will not only create job opportunities but also encourage the hiring of fresh talent, driving economic growth and fostering innovation.
Harsh Shah
We welcome the significant change in the rationalisation of the long-term capital gains taxation for business trusts in this budget. Infrastructure investment trusts (InvITs)/real estate investment trusts (REITs) getting taxed at parity with equities will enhance their attractiveness for investors and strengthen their position as platforms providing superior risk-adjusted returns. We believe that this will also enable InvITs and REITs to become part of stock exchange indices, which will add significant liquidity and momentum.
Manoj Sinha
The Union Budget has taken a crucial step towards enhancing India’s climate action by proposing the development of a taxonomy for climate finance. I was very glad to hear the term “climate adaptation funding” as it is a non-trivial way to look at financing renewable energy programmes. I am hoping to see more clarity on this action and subsequently, policies supporting climate adaptation projects. This will redefine the future of energy security for rural communities that bear the brunt of climate change. Furthermore, the budget highlights the government’s commitment to bringing out a policy document on appropriate energy transition pathways. This will provide a road map for India’s energy transition, outlining strategies and measures to accelerate the adoption of clean energy technologies, promote energy efficiency and reduce the country’s reliance on fossil fuels. By considering the socio-economic implications of the energy transition, the government aims to ensure a just and inclusive transition that benefits all segments of society.
I found a few items that were not laid out in the budget, including the use of artificial intelligence-enabled virtual power plants to systematically integrate decentralised energy resources with the centralised grid, as this is the only viable path for India to realise its ambition of net zero by 2070. This is the need of the hour and the Ministry of Power must consider allocating resources and funding to enable this mechanism.
Sumant Sinha
The Union Budget has undeniably advanced the prime minister’s commitment towards India’s clean energy transition. The finance minister’s announcement that the government will release a policy document on India’s energy transition pathway and a policy on pumped storage will provide much-needed long-term clarity for investments across the value chain. The continuation of the PM Surya Ghar Muft Bijli Yojana, on the back of an overwhelming response for its subscription, underscores the growing appetite for clean energy solutions among citizens, aligning perfectly with our national sustainability goals. Additionally, with nuclear energy poised to be a cornerstone of our energy mix, and innovative nuclear technologies being developed in partnership with the private sector, the future looks promising. With continued policy support, accessible financing and robust public participation, I am confident that we will achieve our renewable energy aspirations for a cleaner, more resilient and economically vibrant India.
