Union Budget 2021 – Solar Power and its Growth
According to the Union Budget 2021, Solar power has not been able to achieve the required boost as expected by researchers.
The Union Budget 2021 is a new hope for a country emerging from impact of the global pandemic. Thanking the Hon’ble finance minister, Shri Nirmala Sitharaman’s Union Budget for Financial Year 2021-22 (FY2021-22) focused on empowering the country to move forward in changing strategic and geopolitical landscapes with accelerated reforms. For the renewables sector, all eyes were on this budget for announcements that would usher in the next chapter of clean energy growth. The Government’s unwavering resolve to enable India’s Paris Agreement commitment is reflected in various positive policy actions with the most recent being the Production Linked Incentive (PLI) scheme to boost domestic solar manufacturing.
2021 is expected to be a milestone year for the renewables sector including the solar energy sector. The Government of India extended immense support to protect businesses during the pandemic with series of medium-sized packages to calibrate response as per the situation.
Globally, diversifying supply chain has become a key priority for economies worldwide. This is a huge opportunity and the time is NOW for India to take bold steps and claim a larger stake in the market growth. Union Budget for FY21-22 was a primary component to achieve this goal.
Welcoming the Union Budget 2021 for measures to enhance capital expenditure, tax exemption for senior citizens and incentives for start-ups among others. The focus on job-creation and economic recovery is evidenced in the increase in healthcare and infrastructure spending to spur growth. Further, the Government’s intent to support double digit yearly growth in manufacturing, 137% growth in health and wellness investment, additional outlay for the PLI scheme, investments in road and transport solutions, development in farming, animal husbandry and fisheries, INR 50,000 crore investment in R&D, and INR 3.5 lakh crore investment in power sector are noteworthy.
Indian Renewable energy industry and especially the solar sector is appreciative of the Government’s policy actions to support green energy throughout the decade and especially during the pandemic. The Union Budget has announced 3.5 lakh crore of new investment to the power sector, INR 1000 crore investment to Solar Energy Corporation, INR 1,500 crores to Indian Renewable Energy Development Agency which will certainly give further impetus to renewable energy growth. This year awaits the details on the phased manufacturing plan for solar cells and solar panels, announced by the finance minister to scale-up domestic capacity. Additionally, Sunnovative believes, raising duty on solar invertors from 5% to 20% and on solar lanterns from 5% to 15% to encourage domestic production will create demand and bring in revenue for further progress. The denouncement of the comprehensive Hydrogen Energy mission 2022 is a welcome move to enable India’s transition to a low-carbon economy.
The solar industry was looking forward to the Union Budget 2021 to strengthen the ecosystem for domestic solar manufacturing. It is the key enabler to lead the country towards sustainable growth.
The domestic solar manufacturing sector was hoping to get more elaborate support on implementation of the Basic Customs Duty (BCD) with exemption for SEZ based manufacturers, 5% Interest Subvention on the term loan and working capital, upfront Central Financial Assistance of 30% on CAPEX, increase export incentive from 2% to 8% under Remission of Duties or Taxes on Export Product (RoDTEP), the super deduction for R&D expenses, more access to National clean energy fund etc.
We hope for comprehensive policy framework to accompany the new phased manufacturing plan for solar cells and solar panels, announced by the finance minister.
Sunnovative is ready and equipped to play a pivotal role in creating a self-sustaining ecosystem for solar manufacturing in India aligned to the Government’s Aatmanirbhar vision. We are confident with policy certainty and focus on boosting the domestic manufacturing sector, India can become the global solar manufacturing hub.