Sumant Sinha, president of Assocham, has demanded that interest rates be reduced for the industry, particularly for domestic renewables, which currently sees rates of 8-10% compared to the 3-4% in western markets. Sinha expressed concern about the government’s expectations for domestic power and renewable energy sectors within the upcoming budget. He said that interest rates should be reduced for rate-sensitive sectors.
Budget Minister Nirmala Sitharaman will present the budget on February 1st. “Bring down interest rates, because our sector is very interest-rate-centric. It is much higher than what you would pay elsewhere in the world. The rate in India is between 8 and 9.5% for the industry, and in particular in power and renewables, it is 8-10%,” Sinha, who is also Chairman of ReNew Power, told PTI in an interview.
Rates in the west are between 3 and 4 percent. Sinha stated that every one percentage point increase in interest rates has an effect of approximately 15 paise on tariff of power. If borrowing is cheaper, the industry can provide lower power to buyers which will have a multiplier effect further down the chain. Singh also suggested that the allocation for PLI for solar module manufacturing can be increased from Rs 19,500 crore in the Budget for FY2022-23.
“In our industry, we would like to see the announcement of the green hydrogen policy. This policy will include some subsidization of hydrogen manufacturing if we are to be competitive at the global level. He stated that the US has a hydrogen production cost of 3-4 USD. The government provides subsidies at the same level, so it is almost free. Last year’s Independence Day speech, Prime Minister Narendra Modi announced that the National Hydrogen Mission was being launched to help the government meet its climate targets. This will make India a green hydrogen hub.
He suggested that the government could also create a PLI Scheme to help electrolysers within its budget. India can become a world leader in hydrogen production if it has the right electrolysers. Sinha also demanded a PLI program to set up wind energy capacity. “Why don’t we also have a PLI scheme for wind? It will also lower the cost of wind. Both solar and wind are renewable energy. “I have suggested it to the government,” he stated, adding that this would help lower the cost of wind capacity which currently costs around Rs 6-7 crore per megawatt.
