As the nation eagerly awaits the 2024 Union Budget, insights from industry luminaries shed light on diverse expectations spanning crucial sectors. From renewable energy incentives and logistics advancements to considerations for electric vehicles, battery storage, carbon credit markets, and supply chain resilience, these pre-budget perspectives offer a comprehensive outlook. Industry experts share their recommendations, outlining a roadmap for a balanced and sustainable fiscal strategy aligning with India’s economic growth and environmental aspirations.
“We expect that a quota should be mandated for the use of green hydrogen, ammonia and methanol in sectors like fertilizers, chemicals, steel, refineries, etc. Besides, the government should also consider implementing a nationwide policy mandating the use of Green M15 fuel i.e. mixing 15% green methanol with petrol, in transportation and other applicable sectors, supported by incentives for producers and consumers to adopt this fuel. It will help in demand creation and reducing production cost.
Besides, the government should also consider extending Section 115BAB of Income Tax up to 2030 for setting up of new manufacturing units for solar modules, electrolyzer and green hydrogen production.
To boost the sectors and achieve desired targets, GST should be kept nil, initially, on Green Hydrogen and its derivatives, whereas 5% GST should be reinstated on Solar Power Generating System and its related parts.
Like renewable energy generation projects, equitable interest rate should be levied for solar module manufacturing projects as currently these projects bear an additional interest of 50 bps.
We also expect that green hydrogen, and its derivatives should be included in the harmonised list of infrastructure sub-sectors as these sectors have the capability to transform the country into a Net Energy Exporter. Also, a mechanism should be developed to facilitate low-cost financing and provide benefits like accelerated depreciation for green hydrogen infrastructure investments.
Customs duty should be exempted for importing green hydrogen technologies, equipment for production of renewable power (such as solar modules), manufacturing of green hydrogen (and its derivatives), such as electrolyzers, fuel cells, other imported components, etc., until adequate manufacturing capacity is established in the country.
Last but not the least, the government should consider implementing a policy where each district with over 100,000 residents establishes a 50 MW solar plant. It ensures localized energy generation, reducing transmission losses and boosting energy security.”
Vineet Mittal, Chairperson, Avaada Group
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“With 2023 being the hottest year on record, tackling climate change has become imperative.The Production Linked Incentive (PLI) scheme, PM KUSUM Scheme, and solar park scheme have all been crucial government interventions in the industry. Now, it is imperative to go beyond budget allocations. For instance, last September, INR 3,760 crore was allocated as Viability Gap Funding (VGF) for the development and deployment of Battery Energy Storage Systems (BESS). We can take this further by focusing on market-facing allocations which can help in tapping a bigger market with a smaller pool of capital.
As India seeks to meet its ambitious RE targets, unlocking blended finance is crucial to ensure the growth of the RE sector. Public-Private Partnerships (PPPs) are important to scale up indigenous solutions and meet the government’s renewable energy goals.”
Saurabh Kumar, Vice President-India, Global Energy Alliance for People and Planet (GEAPP)
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The rooftop solar sector in India is rapidly expanding, with an impressive CAGR of 15%. To further accelerate adoption of solar, Ministry of New and Renewable Energy (MNRE) has decided to increase the Central Financial Assistance (CFA) by 23%. One major challenge that many customers face, however, is the high upfront investment. To promote wider adoption of solar energy, we hope that the 2024 union budget will encourage banks to offer affordable financing options for solar solutions. By providing low-interest loans, these financial institutions can significantly contribute to India’s progress towards sustainable energy.
Saurabh Marda, Managing Director and Co-Founder, Freyr Energy
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The Indian government is steadfast in its pursuit of a robust renewable energy transition, allocating Rs.35,000 Crs for capital investment, waiving ISTS charges, and introducing a Rs 24,000 Cr PLI scheme for in-house manufacturing. The industry advocates for increased financial allocation to expedite capital investment, particularly in core backward integration. Emphasizing the importance of technology independence, the industry urges the establishment of design labs and R&D platforms. Competitive financing options, improved policy alignment between central and state authorities, and realignment of tax structures are crucial for the sector’s growth. Industry stakeholders also stress the need for closer integration of solar, wind, and battery solutions, emphasizing cost optimization and extension of PLI schemes to these segments for achieving sustainable renewable energy goals swiftly.
SK Gupta, Director & CFO, AmpIn Energy Transition
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“Recognizing the forthcoming interim budget leading up to elections, will be for a short period, the role of strategic budgetary allocations will be crucial in paving the way for future provisions that can accelerate the growth of the renewable energy sector. In line with India’s goal of achieving 500 GW of non-fossil energy by 2030 from the current capacity at 179.5 GW, there’s an opportunity to incentivise the shift to sustainable energy.”
“Financial incentives such as tax credits, grants, and subsidies should be enhanced to make renewable energy solutions more economically viable for consumers and businesses alike. This can significantly reduce the initial investment barriers and accelerate the uptake of solar, wind, and other clean energy technologies.”
“Addressing India’s dependence on solar panel imports, which reached $1.13 billion in the first half of the current financial year, is a pressing concern. Therefore, the budget should incorporate measures to promote indigenous development, facilitate technology transfer, and incentivize localized manufacturing initiatives to conserve foreign exchange. More proactive measures and fiscal incentives should be provided and efficiently implemented for making India a BESS manufacturing and R&D hub.”
“Furthermore, we stress the importance of establishing a long term and stable regulatory framework that streamlines approval processes for large-scale projects, open access projects, implement efficient net metering policies, and ensure seamless integration of renewable sources into the existing grid infrastructure. Collaboration between public and private entities is paramount to building a sustainable energy ecosystem that benefits both the economy and the environment”
Vaibhav Roongta, Chief Business Officer – Rays Power Infra Pvt. Ltd.
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“A reduction in GST for turbines and solar modules, from 12% to 5%, has the potential to bolster the renewable energy sector significantly. The current high tax adversely impacts tariff increases, hindering the growth of the industry. A lowered tax on these critical components could contribute to cost reduction, enhancing the economic viability of renewable energy projects. Additionally, the inclusion of electricity within the GST framework would be a significant move. This adjustment can streamline tax processes, alleviate complexities, and potentially impact the overall tax burden on electricity. Given the current scenario where financing for Renewable Energy (RE) operates at commercial rates, a decrease in interest rates or the provision of subsidized rates could stimulate further development in this sector.”
Neerav Nanavaty, CEO at BluPine Energy
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“As anticipation builds for the upcoming finance budget, the electric vehicle (EV) industry is poised for transformative reforms. Advocating for a streamlined Production-Linked Incentive (PLI) scheme, stakeholders seek clarity in provisions to encourage investment and growth. The call extends to widening the scope of the FAME II scheme, fostering innovation in diverse EV segments.
A crucial focus lies on incentivizing in-bound technology transfer and manufacturing capabilities, positioning India as a global EV technology hub. Anticipating the central role of lithium-ion batteries, we urge GST reform for increased cost-competitiveness. Charging infrastructure development, especially through public-private partnerships, is deemed pivotal for accelerated EV adoption.
Moreover, the promotion of universal battery charging and swapping infrastructure aims to simplify the user experience and standardize EV charging. The forthcoming budget is anticipated to lay the foundation for a sustainable, technology-driven future in Indian mobility, aligning with global EV trends.”
Nikhil Bhatia, Co-Founder & Chief Strategy Officer, HOP Electric Mobility
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“One of the most anticipated schemes to be continued is the FAME II subsidy (Faster Adoption & Manufacturing Electric Vehicles). This subsidy was announced in 2019 having a validity for 3 years. It is expected that the govt will continue this for the next few years in response to decarbonising the environment and achieve the targets of net 0 goals.
Along with this, there is a proposal to reduce the GST on the Li-ion batteries from 18% to 5% overall, reducing the cost of acquiring EV’s. Since batteries are a major cost component in EV’s, the move to reduce the cost of batteries will make the product more lucrative for buyers.
Over the past 5 years the government has focused a lot on building strong infrastructure. It is expected to continue improving and make efficient investments in energy, especially green energy and sustainable energy. The focus is on transitioning from carbon dependent to energy efficient policies. The new transport policies being adopted by the state govt is a testament to this shift. Many state transport authorities have announced the conversion of Petrol/Diesel cabs be converted into EV’s by the end of this decade.
We look forward to EV financing getting priority sector lending status as the government’s ambitious target of 30% penetration to be achieved by 2023.”
Mayank Bindal, Founder & CEO, Snap E Cabs
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“Embracing a sustainable future requires bold steps, and in the upcoming budget, I advocate for a visionary approach towards renewable energy adoption. Investing in renewable energy infrastructure is not just an environmental imperative; it’s an economic opportunity that can power our nation forward.
In the drive towards a greener tomorrow, the government can catalyze change by incentivizing renewable energy projects and R&D initiatives. By allocating resources to enhance solar and wind power capacities, we not only reduce our carbon footprint but also fortify our energy security.
Crucially, as the electric vehicle revolution gains momentum, integrating renewable energy into the national grid becomes paramount. A strategic allocation in the budget for renewable energy will not only power homes but also fuel the burgeoning electric vehicle segment. By creating an ecosystem where clean energy sources power our transportation, we pave the way for a sustainable and resilient future.
We envision a budget that aligns economic growth with environmental responsibility, driving the nation towards a future where renewable energy propels both our homes and our vehicles. It’s not just an investment in power; it’s an investment in a cleaner, brighter tomorrow for generations to come.”
Sameer Aggarwal, CEO & Founder – Revfin Services
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“As we anticipate the 2024 budget announcement, we hope for a forward-looking budget that reflects India’s commitment to sustainability and technology advancement. A large volume of India’s end-of-life Lithium-ion batteries is exported globally for recycling or just processed as an intermediate black mass and then exported. Hence, massive R&D investments are required, particularly to create strong competencies and lab testing facilities for the proper end-of-life Lithium-ion battery recycling. This not only contributes to responsible environmentalism but also nurtures a talented pool of individuals.
Another area, where we are hopeful for is the Production-Linked Incentive (PLI) and it’s extension to battery recycling. This would also be a strategic approach as by expanding the range of the scheme beyond just the Advanced Chemistry Cell manufacturing, we open up the opportunity to capture the entire value chain. This extension will incentivize the setting up of homegrown recycling firms instead of shipping away the dead batteries.
We also recommend that the recycling of Lithium-ion batteries be incorporated into the Carbon Credit Trading Scheme. This inclusion, in particular for negative-value battery chemistries feasibility will provide substantial support to India’s position in the carbon credit markets and also demonstrates our continued dedication to sustainable solutions.”
Shubham Vishwakarma, Co-Founder, Chief of Process Engineering and Visionary Alumni of IIT Roorkee
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“As we approach the final Union Budget under the current government ahead of the impending general elections, Budget 2024 assumes the role of an interim budget rather than a comprehensive fiscal plan. Over the preceding five years, the government has diligently worked on bolstering national infrastructure, with a prospective shift in focus towards enhancing port and shipping facilities, promoting green and sustainable energy, and fortifying urban infrastructure. This budget presents a pivotal juncture for steering policies from carbon dependency to energy efficiency, necessitating the active involvement of financial services players in the fight against climate change. Incentivising investments in green bonds and renewable energy enterprises stands as a strategic move, contributing to India’s ambition of achieving net-zero emissions by 2070. We hope there will be increased focus on favourable policies and taxation to increase the adoption of renewable energy.”
Aditya Poonia, Founder, Etrica Power
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“We anticipate a budget geared towards reinforcing India’s position as a global technology powerhouse, further underlining our ascent as a frontline leader. The resilience of our domestic economy amid worldwide volatility has been remarkable. With India’s GDP surging by 7.6% in Q3 of 2023 and an impressive 7.8% in Q1 of FY24, our nation stands out, thanks to vigorous internal demand even as a worldwide economic deceleration impacts exports. The upcoming budget is expected to adopt a balanced approach. We foresee an interim financial plan that will address immediate fiscal needs while laying the groundwork for a comprehensive budget that will steer long-term economic strategy.”
Srinivasa Bharathy, CEO & MD, Adrenalin eSystem
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The Indian logistics industry is growing, due to a flourishing e-commerce market and technological advancement. The industry has progressed from a transportation and storage-focused activity to a specialized function that now encompasses end-to-end product planning and management, value-added services for last-mile delivery, predictive planning, and analytics, among other things.
In the upcoming 2024 budget, emphasis is placed on bolstering global manufacturing, positioning India as a viable alternative to China. This strategic move is set to propel significant growth in the logistics sector. Led by Prime Minister Narendra Modi, the government has initiated substantial infrastructure projects with a specific focus on fortifying logistics. Effective budgetary strategies, including financial incentives coupled with investments in infrastructure projects to reduce logistics costs, are crucial.
The logistics sector in India was valued at US$ 250 billion in 2021, with the market predicted to increase to an astounding US$ 380 billion by 2025, at a healthy 10%-12% year-on-year growth rate. Moreover, the government is planning to reduce the logistics and supply chain cost in India from 13-14% to 10% of the GDP as per industry standards.
The budget is anticipated to introduce proactive measures, creating an enabling ecosystem for the integrated growth of logistics and manufacturing.
Ratheesh D, Director, CABT Logistics- First Mile, Mid Mile & Last Mile Services
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In the year 2022, the size of the Indian logistics market was around 274 billion U.S. dollar. It was estimated that this market would grow to 563 billion dollars in 2030, at a compound annual growth rate 9.4 percent. India has a higher logistics cost as a percentage of GDP at 14 percent, compared to the BRICS average of 11 percent and with the country setting its sight on being the global manufacturing hub, the logistics sector will need attention as well.
For the 2024 budget, the focus is on significant strides in global manufacturing. The country is looking at being a viable alternative to China as a manufacturing hub. This means that the logistics sector will also be witnessing increased growth and progress. The government, led by Prime Minister Narendra Modi, has launched substantial infrastructure development projects with a specific focus on strengthening the logistics sector. These initiatives are viewed as crucial steps towards positioning India as a central hub for manufacturing. Government programs like PM Gati Shakti and the National Logistics Policy are anticipated to create a supportive environment, fostering the growth of India’s manufacturing sector.
To achieve this, the implementation of effective budgetary strategies, including the provision of financial and regulatory incentives such as Production-Linked Incentive (PLI) schemes, alongside investments in infrastructure projects aimed at reducing domestic logistics costs, remains pivotal. Enhancing the overall efficiency of India’s supply chain, particularly through improvements in transportation infrastructure, is imperative. The budget, we hope will include proactive measures to create an enabling ecosystem for logistics and manufacturing.
Vishal Jain, Co-founder, Roadcast
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In the midst of global upheavals, India must rely on its internal dynamics for medium-term growth, with the imminent interim budget laying the groundwork for the comprehensive budget later this year. Last year’s budget focused on the significance of power distribution reform and a shift towards clean energy. As an industry we are hoping for a substantial increase in budget allocation for the renewable energy sector, coupled with incentives for energy storage systems, heightened capital expenditure on green energy transmission, and support for emerging eco-friendly power sources.
This budget presents an opportunity for the government to prioritize the transition from carbon-centric to energy-efficient policies. Financial institutions hold a pivotal role in addressing climate change. Therefore, promoting investments in green bonds and renewable energy enterprises becomes imperative. Such incentives can propel India towards achieving its net-zero emission goal by 2070 and securing 50 percent of energy needs from renewable sources by 2030.
Ishan Chaturvedi, Co-founder, Vareyn Solar
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The union budget 2024 should continue to spell consistency in terms of direction and velocity of infrastructure development. The plans to build 91 airports and 100 smart cities are likely to get extended fiscal support. It would be great to see greater adoption of the bridge health monitoring system and predictive artificial intelligence to identify physical assets that need repair and maintenance and thus direct resources and fiscal outlay accordingly. I strongly feel that solar rooftop installations need to go mainstream in the household sector to truly give wings to India’s green transition and should figure on the honorable FM’s checklist. Lastly, I think there’s a need to simplify the regulatory framework so that EPC companies with an A++ credit rating can raise capital through issue of corporate bonds. It will inject greater liquidity into the EPC supply chain ecosystem for infrastructure and green energy projects without piling up risks of fiscal profligacy for the government.
Partha S Dash, Managing Director, Moglix
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The Central government has been on the right path in paving the way for large scale embrace of drones in India with its decision to provide 15,000 agricultural drones free of cost to rural women under the Drone Didi initiative. The aviation sector is bound to see incredible changes in the coming years. In budget 2024, we are hoping to see ease of regulations for start-ups as well as consumers, along with easy financing for drones for commercial purposes. A 100 percent subsidy to farmers on drone training certification program through Skill India would support the drone ecosystem of the country. GST waiver on drone, allied products, software, training, and license could be an excellent step towards that future. We are hoping to see ease of regulations for start-ups as well as consumers. For instance, PLI scheme extension for component and manufacturers would be a great incentive for start-ups. Easy financing for drones for commercial purposes can go a long way in making them affordable to all sections of the society. Fine tuning policies and quicker clearances will help the drone industry achieve its true potential of making India a drone hub by 2030.
Prem Kumar Vislawath, CEO and Founder, Marut Drones
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“It is consistently demonstrated that hydropower plants across the spectrum: storage, run-of-river, and pumped storage provide immense benefits. However, this sector faces a lot of challenges – the financing sentiment in the hydro power sector has been quite damp in the past two years with no major financial closure being reported. Then, clearances from multiple departments during the project-planning stage consumes a lot of time. Uncertainty over the public acceptance of the project’s socio-environmental impacts; water sharing disputes; Environmental Impact Assessment issues; geological surprises; underdeveloped project location with lack of basic infrastructure and communication networks; power evacuation issues; and lack of skilled contractors/workforce are some of the other challenges faced by Hydropower sector.
Keeping all these issues in consideration, I would like to recommend a few measures before the budget announcement this year. The Government may like to consider the need for central and state government’s cooperation to actively work towards hydropower promotion -the states’ water-sharing agreements should include hydropower development agenda; government’s cooperation in developing basic infrastructure as well as power evacuation infrastructure. Moreover, establishment of a nodal agency/ institution dedicated to hydropower development could be announced during the budget; Central and state governments could help in creating public awareness programs to highlight the importance of hydropower projects so that it minimizes the social barriers. The pumped storage hydropower plants can be incentivized for maintaining grid stability through the ancillary services and by acting as a water battery to support grid integration of intermittent renewables such as solar and wind.”
Udit Garg, Director, Kundan Green Energy
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The upcoming budget holds a pivotal role in steering India towards a sustainable future by fostering the growth of battery recycling. The circular economy’s cornerstone, battery recycling, addresses mineral scarcity and reinforces our supply chains, paving the way for self-sufficiency in battery materials. While regulations like the Electronics Waste Management Rule and Batteries Management Rule have strengthened the recycling industry, persistent challenges call for solutions. To further empower this sector, streamlined recycling policies and incentives for pioneering waste management solutions are imperative.
The rapidly growing adoption of electric vehicles is a catalyst for the EV battery recycling industry. Initiatives such as FAME, PLI, and other incentives should be amplified to fuel this momentum. A tailored PLI scheme dedicated to lithium-ion battery recycling will be a game-changer, amplifying the sector’s growth while advancing India’s sustainability goals. As we approach the budget, investing in these strategic measures will not only invigorate the recycling industry but also cement India’s position as a global leader in sustainable practices.”
Rajesh Gupta, Founder & Director at Recyclekaro
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The deferral of ALMM, a drop in the cost of imported cells/modules, more financing opportunities, and increased consumer awareness have fueled recent growth in the rooftop solar segment. However, to meet our targets, there is still much to be done. As of December 31, 2023, the total installed renewable energy capacity (primarily solar and wind, excluding hydro) is only 31% of the total installed capacity of power stations. Furthermore, the installed rooftop solar capacity has reached 11 GW, which is just a quarter of our March 2022 target of 40 GW.
We have identified certain key areas where we hope the Budget will deliver positive news. The removal or reduction of Basic Customs Duty (BCD) on imported modules could further reduce prices and stimulate demand. A tax incentive, such as a rebate or deduction for domestic users, would boost residential solar adoption. Providing incentives to DISCOMs for exceeding rooftop solar targets would also have a positive impact. Rationalizing the GST on solar projects is essential. The current GST rate of 13.8% is quite high and negatively affects return on investment. It should be reduced to make solar investment more attractive. Finally, ensuring easy access to working capital finance for EPCs is important, as they play a key role in building quality solar assets in the country.
Manjesh Nayak, CFO and Co-Founder of Oorjan Cleantech
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“The Government of India is following a strategic path to achieve India’s net-zero target and taking important decisions to accelerate decarbonization of the power sector while pushing inclusion of renewables. Avenues such as creating a robust green credit system, continued boost to the manufacturing through expansion of the Product Linked Incentive (PLI) scheme, investments to build green hydrogen sector and adoption of BESS (Battery Energy Storage System), can ensure a sustainable growth in the energy space for India. In tandem, adoption of advanced digital software technology can transform the power sector by improving efficiency, reliability, and security. Grid modernization is also a critical area that will play a key role in pacing successful adoption of renewables and hybrid energy systems into India’s energy mix. Policies that can facilitate growth in usage of hybrid-RE electrical systems and two-way grid flow will help us to maintain last-mile connectivity.”
Sandeep Zanzaria, MD & CEO, GE T&D India Ltd.
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