Union Budget 2019: Mixed Reviews from pioneers of solar industry in India
The reinstated Modi government, quite expectedly had a few plans for the renewable energy sector.
In the budget, the government has proposed Rs.12,353.81 crore investment by the Indian Renewable Energy development agency and solar energy corporation for the fiscal, up from Rs.10,835.14 Crore in 2018-19. Finance minister Nirmala Sitharaman, in her first budget speech, also announced a scheme to invite global companies to set up mega manufacturing plants in technology areas such as semi-conductor fabrication, solar photovoltaic cells, lithium storage batteries and solar electric charging infrastructure, and provide investment-linked exemptions under Section 35 AD of the Income Tax Act, and other indirect tax benefits.
The Government of India’s policy think tank NITI Aayog CEO, Amitabh Kant, has welcomed the budget by tweeting, “#Budget2019 proposals to give additional income tax deduction of Rs 1.5 lakh on interest paid on loans taken for #EVs is timely!”
On the policy direction for Indian solar PV module manufacturing, Vikram Solar’s Chief Financial Officer, Rajendra Kumar Parakh, expressed his concern by saying that, “I would like to congratulate honorable finance minister, Smt Nirmala Seetharaman for presenting her maiden budget. The industry was expecting a policy direction from the government to promote the manufacturing through Make In India program, especially in the renewable energy sector. Government announcement to launch a scheme aimed at encouraging global companies (through competitive bidding process) to set up mega-manufacturing plants in sunrise and advanced technology sectors appears to be a step forward in that direction.
We welcome this move as it will boost the Make in India programme. Having said that, setting up mega manufacturing plants of solar photovoltaic cells and modules require a larger support structure in the form of soft loans, export credits in order to compete globally, etc.”
Dr. Rahul Walawalkar, President, India Energy Storage Alliance (IESA) said, “On Electric Vehicles: the GST reduction from 12% to 5% is a welcome move. The income tax deduction up to Rs 2.5 lakh (~$3500) on the interest of the loan to purchase EV will speed up the EV revolution. Govt has set an objective to make India a global hub for manufacturing of EVs including solar electric charging infrastructure.
Exemption from customs duties for EV components such as e-drive, onboard chargers, etc. will help reduce the cost of EVs on road, at the same time, the Phased Manufacturing Plan announced by DHI will also incentivise manufacturers to invest in domestic localisation of EVs over next 3 years.
Allocation of Rs 10,000 Cr for FAME II incentives to reduce the upfront cost of EVs will have an immediate impact on boosting the sales of 2W, 3W, Cars and Buses with advanced batteries in India.”
Meanwhile, Suntuity Renewable energy India’s Director Imaan Javan said: “We believe in championing green energy. This year’s budget looks promising in promoting green energy in India. Today, the Finance minister Nirmala Sitharaman, welcomed global companies to set up manufacturing plants in the solar sector in India which will promote solar energy. This initiative taken by the government will enhance the solar energy segment and will promote the growth and development of clean energy in our country as well as provide employment opportunities within the country.”
However, solar PV modules manufacturer Waaree Energies’ Director, Sunil Rathi, has raised his concern on the Budget and said, “While we appreciate the Government’s focus on environmental reforms, it is imperative to focus on the solar segment as a key contributor for clean energy, which is missing from the Budget. With the economic viability of the solar power coupled with the fact that conventional energy sources now have to match solar parity, it would have been heartening to see more focus on the solar segment to promote ecological stability. The infusion of Rs 70,000 crore in the PSBs to stabilize the economy will in-turn benefit the NBFCs, which, in the absence of a recognized banking unit to support small – mid-scale solar financing will provide an impetus to the solar project financing. However, the invitation to foreign PV manufactures to set-shop in India, without prior stabilisation of the domestic manufacturing market, is premature and may prove to be counterproductive for the demand in the sector, which will render the NBFC financial support redundant.
The Govt. has been indicating some changes in the solar segment for a while; however, we believe that there are critical gaps that need to be plugged. On one hand, while the safeguard duty provided the industry with interim relief, the short-sighted implementation of a year holds the proverbial sword of uncertainty in the industry. Moreover, a lack of tangible movement on the anti-dumping policy has dampened the business projections in the segment. The only silver lining in the budget is the progressive movement towards the adoption of Electric Vehicles (EVs) and the incentives being offered to the end consumer. With the promotion of clean energy through the use of EVs is likely to boost the demand in the segment, thus providing impetus to achieve economies of scale and in-turn create a viable ecosystem.”