In the first Union budget to be presented tomorrow by Union Finance Minister Nirmala Sitharaman since India announced the Long-Term Low Emission Development Strategies (LT-LEDS) to achieve the net zero emission goals by 2070, while many industry sectors are expecting various green incentives, experts say the budget should also focus on incentives that encourage masses to go green to achieve the long term goals.
It is imperative that the vision of long-term transition is embedded in the annual budgets, as the fiscal policy alters incentive structure for consumer and producer choices, says Dr. Vibha Dhawan, Director General, The Energy and Resources Institute (TERI). "The budgetary allocations for yet-to-be-built infrastructure must account for the needs of green planning, particularly the promotion of energy-efficient building designs, sustainably produced materials and the use of renewables," she says.
The efficiency of green subsidies needs to be enhanced by prioritising greener alternatives, such as biofertilizers and nano-fertilizers. Promotion of solar energy by targeting high power-consuming households and a combination of generation-based incentives for installing solar rooftops with higher peak tariffs will encourage high power-consuming households to invest in solar rooftop systems.
"One of the key asks from the budget would be to declare “Rooftop Solar” as a priority sector lending, that will boost credit to such projects in India. To include solar manufacturing in the "infrastructure category" so credit flows from infrastructure financing entities be feasible to this sector", says Gyanesh Chaudhary, MD & VC, Vikram Solar.
"In 2022, the government released a dedicated policy framework to promote decentralised renewable energy applications for livelihoods. We hope that this significant example of pursuing the trifecta of jobs, growth, and sustainability, would find fiscal allocations in the upcoming budget to start realising the vision of the policy framework," says Abhishek Jain, Fellow & Director- Powering Livelihoods, Council on Energy, Environment and Water (CEEW).
The range of options that the recently amended Energy Conservation Act offer can be innovatively utilized for bringing down the cost of transition as well as distribution and enforcement of national targets to a wider set of actors, says Dhawan.
Experts also point out that the promotion of electric vehicles should be a priority to take the green agenda to the masses. Industry demands the taxation on EVs and components like batteries must be lowered so that the vehicles can be made more affordable for the masses. For instance, the GST on Advanced Chemistry Cell batteries is expected to be reduced to 5% which will make it at par with the GST on EVs.There is a need to consider a tax subsidy for 2- wheelers akin to the 4- wheelers consumer finance for the low-speed category. Apart from this, the Delhi e-cycle subsidy must be rolled out to other metros as well.
"Electric 2-wheelers and e-bikes are ideal for the last-mile delivery services provided by food delivery platforms, ecommerce companies, and courier services etc. This pace of adoption can be accelerated by offering lower GST to operators who switch their fleets to EVs. At present the GST on such services is calculated at 18% and lowering of this amount and offering green mobility incentives would be a welcome step", says Tushar Choudhary, Founder & CEO, Motovolt Mobility.
Introduction of a comprehensive Battery Swapping Policy can transform and expedite the growth of the EV ecosystem if it is simplified on the lines of CNG policy by standardizing only the battery and vehicle specifications and not the types. The simplification through the upcoming Budget should be followed by an early implementation as 2023 is a crucial year to build momentum, says Varun Goenka, CEO & Co- Founder, Chargeup. The long-standing demands of including EVs in priority sector lending, and reduction of GST from 18% to 5% will help reduce the upfront costs of EVs and make them more affordable leading to faster adoption across the country, he says.
Taxes on bio fuels should be brought to nil, Zero GST on Green Cement and Green Steel etc are some of the other suggestions to take the green agenda to the masses, they say.