Budget 2021 Sets Aside ₹10 billion for SECI, Increases Customs Duty on Solar Inverters

Union Finance Minister Nirmala Sitharaman presented the 2021-22 budget in the parliament in the backdrop of a falling economy crushed by the COVID-19 pandemic.

The Finance Minister said that the last six years had seen several reforms and achievements in the power sector. “We have added 139 gigawatts of installed power capacity, connected an additional 2.8 crores households, and added 1.41 lakh circuit km of transmission lines,” the finance minister said.

Sitharaman also spoke about distribution companies (DISCOMs), both government and private, becoming monopolies. “There is a need to provide choice to consumers by promoting competition. A framework will be put in place to give consumers alternatives to choose from among more than one distribution company,” the minister added.

The Finance minister mentioned that the viability of DISCOMs was “a serious concern.” A revamped reforms-based result-linked power distribution sector program is expected to be launched with an outlay of ₹3.05 trillion (~$41.92 billion) over five years. This is in line with the demand made by the Union Minister of Power, R.K. Singh in June last year.


The program will assist DISCOMs in infrastructure creation, including prepaid smart meters, feeder separation, up-gradation of systems, tied to financial improvements, according to the minister.

The Finance Minister recalled that Prime Minister Narendra Modi in November 2020 had announced plans to launch a comprehensive National Hydrogen Energy Mission. She said there is now a proposal to launch a ‘Hydrogen Energy Mission’ in 2021-22 for generating hydrogen from green power sources.

The government has decided to infuse additional capital of ₹10 billion (~$137 million) in Solar Energy Corporation of India (SECI) and ₹15 billion (~$205.6 million) in the Indian Renewable Energy Development Agency (IREDA).

Sitharaman, said that the government is proposing to raise the customs duty on solar inverters from 5% to 20% and on solar lanterns from 5% to 15% to encourage domestic production.

 

Budget 2021 Sets Aside ₹10 Billion for SECI, Increases Customs Duty on Solar InvertersThe government has also proposed reducing customs duties on semi-steel products to 7.5% to counter the sharp spike in steel prices.

The finance minister said that to build up solar capacity, a phased manufacturing plan for solar cells and solar modules will be announced.

The government has also proposed voluntarily scrapping vehicles older than 20 years (personal) and 15 years for commercial vehicles. The government also announced a new program with an outlay of ₹180 billion (~$2.46 billion) to improve the public bus transport service.

Exemption of customs duty to all items of machinery, instruments, appliances, components, or auxiliary equipment for setting up of solar power generating projects will be revoked.

Debt Financing of infrastructure investment trusts (InVITs) by foreign portfolio investors will be allowed with amendments in the legislation. This is expected to provide ease of access to finance InVITS boosting the availability of funds for the infrastructure sector which includes the power sector.

In last year’s budget, the finance ministry had allocated ₹220 billion (~$3.08 billion) for the power and renewable sectors.

Mercom recently spoke with several solar players in India to gauge their expectations from the government in the new financial year.

 

Image credit: Ministry of Finance (GODL-India), GODL-India, via Wikimedia Commons