The interim budget announced by interim Finance Minister Piyush Goyal did not offer much for India’s renewable energy sector.
Mercom had reported that the budget could be an opportunity to help restore confidence with stakeholders, announce further reforms, and steer the renewable energy industry in the right direction to meet the target of 175 GW of renewable energy by 2022 — a goal which was set by the NDA administration at the beginning of its five-year term.
However, the interim budget was devoid of any grants, incentives, or subsidies for the renewable energy sector, disappointing the renewable energy sector in India. Much like the Union Budget 2018-19 and the 2017-18 Budget, this much-anticipated budget by the NDA government – just a few months away from the Lok Sabha polls – did not do much to allay uncertainties. In the budget speech, there were only fleeting references to the renewable energy sector with the Minister mostly talking about major sectoral initiatives undertaken by the NDA government through the year.
“As expected, there was nothing in this budget for solar, wind or any other renewables and was understandable considering that this was an interim budget. However, the industry was expecting some good proposals to help the sector move forward which did not come. Good news is that there was nothing bad for the sector which in itself is a relief for many in the industry,” said Raj Prabhu CEO of Mercom Capital Group.
Mercom spoke with various top officials of companies involved in India’s renewable energy sector to find out what they had to say after the Budget was tabled in Parliament today.
Amit Gupta, Director of Legal & Corporate Affairs, Vikram Solar, said, “In a situation where there is scarcity of financing options for renewables and manufacturing units are dying a slow death, the budget provides no ray of hope. The industry was expecting a policy direction from the government to promote manufacturing, especially in the renewable energy sector in the background of job crisis, which India is facing right now. Surprisingly, this was completely missing from the budget. Budgetary allocation for the MNRE remains approximately similar to the capital allocated in FY 2017-18. Unfortunately, the government did not act upon the Parliamentary Standing Committee recommendation, which reinstatement the funding of renewable energy projects through National Clean Energy Fund (NCEF), which was diverted towards GST compensation fund since 2017.”
Chetan Shah, Director of Goldi Solar, said, “Since it was an interim budget for two months only, there were less industry specific expectations overall. However, as a manufacturer, we expected some positive announcements related to the Make in India initiative, like Modified Special Incentive Package Program, which has not been covered in this Budget. We expect favorable announcements in the first Budget of the new government.”
Nikunj Ghodawat, CFO, CleanMax Solar, said, “What we will wait to see is the finer print on the renewable industry like uniformity in policies, imposition of duties, ease of financing etc. to reduce the dependence on depleteable energy resources, thereby fueling the adoption of renewable energy. For electric vehicles to be a norm in the future, policies should include how EVs can be powered by renewable energy. While the budget has confirmed the role of renewables in its vision of a clean and green India, and states have started showing enthusiasm in adoption, a long-term road map will be expected by the industry.”
Gagan Vermani, CEO & Founder, MYSUN, said, “For the second year in a row, solar was a no-show at the 2019 Interim Budget, apart from a sole mention about the installed solar generation capacity addition in the past five years. While prices for solar have continued to drop over the last year, it’s the lack of financing for solar projects that have hit the industry hard. And this year’s budget has missed addressing that yet again. We have been demanding solar loans to be treated like home loans, as an instrument for individuals to claim a tax rebate. But seems like the industry will have to wait for that. There is some indirect relief to MSME units registered with the GST in the form of a 2percent interest rebate on fresh or incremental loans up to a limit of Rs 10 million (~$0.14 million). This may incentivize some of these MSMEs to utilize this facility to install solar systems on their rooftops and thereby reduce their energy bills.”
Sunil Rathi, Director Waaree Energies, said, “The government indication that the solar power generation has increased 10 times in the last five years, stands testament to the fact that solar energy has been leading the alternative energy space, and playing its part in achieving energy security in the country. With the Government’s aim to reduce dependency on fossil fuels, as well as imports, it is imperative that the solar domestic manufacturing segment receives ample Government support in form of anti-dumping policies and subsidies. If the support towards solar energy sector is sustained, and given a conducive economic environment, the sector will lead in generation of employment and broaden the horizon of solar energy penetration in the country.”
“Electric vehicles and solar rooftop projects are going to provide the much needed respite to deteriorating environment in our urban areas. We look forward to concrete steps for promotion of rooftop solar and electric vehicles so that every common person starts adopting these life-transitioning technologies,” Sanjeev Aggarwal, Founder and CEO, Amplus Energy said.
Ashish Khanna, MD & CEO, Tata Power Solar commented on the budget, saying, “In the Union Budget 2018-19, the central government took some prominent steps towards accelerating solar water pumps installations in the agriculture industry and the introduction of the KUSUM scheme. This scheme helped farmers to generate some extra income by selling their additional power to the grid. However, there were issues that could have been addressed in the last budget for the betterment of the solar and renewable industry. The industry expected some clarity on the tariffs and import duties on solar modules, which are still under some wraps. To make renewable energy more affordable, taxes levied on solar modules and services need to be reconsidered. In conjunction with pushing the proposition on electric vehicles and its infrastructure in India, private RE players must be given a leeway in manufacturing solar panels and batteries by developing a robust domestic technological framework, instead of depending on imports. There should be an incentive on developing next generation solar panel manufacturing technology in India as well as investing in storage, hybrid and offshore wind projects. We must wield more advantage of the technological edge that India has the capacity to provide, if not compete with the mammoth scales of operations in neighbouring countries. We expect to see the budget to give impetus to funding, investment and incentivize technology for manufacturing and further proliferation of renewable energy across the nation.”
It should be noted that the government has only presented an interim budget (also known as a vote on account, which is slightly different from the regular budget). Usually, when the incumbent government is nearing the end of its term and an election is around the corner, the prime purpose of the budget is to get the approval of Parliament to meet ongoing expenditures of the government with a few tweaks and announcements here and there. Later, when a new government takes charge, a full budget is presented with revisions. So, not all hope is lost for the sector and now begins another wait for the full budget after the elections.
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