A green Budget for a cleaner India

In a bid to achieve India's renewable energy target of 175 GW by 2022, Finance Minister Nirmala Sitharaman on Monday laid major emphasis on clean energy in her Budget speech. "To give a further boost to the non-conventional energy sector, I propose to provide additional capital infusion of ₹1,000 crore to Solar Energy Corporation of India (SECI) and ₹1,500 crore to Indian Renewable Energy Development Agency (IREDA)," she said.

She also announced a customs duty hike on solar inverters and lanterns. This is expected to have an impact on rooftop and ground-mounted projects, and also on the distributed renewable energy sector. “To encourage solar manufacturers, we are raising duty on solar inverters from 5% to 20% and on solar lanterns from 5% to 15%,” she said during her Budget speech.

She added that the government is in the process of making a phased manufacturing plan for solar cells and solar panels to build domestic capacity.

The industry, however, wanted more. “The FY2021-22 Budget has left the non-utility solar players to fend for themselves. Adding to the misery is the capped net metering of 10 KW, which is likely to impact 70% of the rooftop solar business; the government’s stance to raise import duties on solar inverters will further discourage potential investment in the solar development segment, and adversely affect employment," Animesh Damani, managing partner, Artha Energy Resources, said.

He said that the allocation of ₹2,500 crore fund to SECI and IREDA (cumulatively), is not likely to benefit the private players. "Moreover, the silence of the authorities on the GST front has now become a matter of concern, which if introduced, had the potential to generate revenue for the government, and aide private players alike," he said.

The finance minister has also announced plans to launch a comprehensive National Hydrogen Energy Mission for generating hydrogen from green power sources. This, Damani feels, is the only silver lining in the Budget. "The government taking note of the hydrogen energy sector and we hope for it to have a serious outlay. This, in turn, is likely to prompt Indian players in the sector to take the lead globally," he explained.

Not just on solar and hydrogen, Sitharaman stressed on other parts of cleaner energy as well. "The World Health Organization has repeatedly stressed the importance of clean water, sanitation, and clean environment, as a prerequisite to achieving universal health. The JalJeevan Mission (Urban) will be launched. It aims at universal water supply in all 4,378 Urban Local Bodies with 2.86 crore household tap connections, as well as liquid waste management in 500 AMRUT cities. It will be implemented over five years, with an outlay of ₹2,87,000 crore," Sitharaman said.

The government also plans to focus on complete faecal sludge management and waste water treatment, source segregation of garbage, reduction in single-use plastic, reduction in air pollution by effectively managing waste from construction and demolition activities and bio-remediation of all legacy dump sites, especially with respect to urban India. "The Urban Swachh Bharat Mission 2.0 will be implemented with a total financial allocation of ₹1,41,678 crore over a period of five years from 2021-2026," she said.

Sitharaman also allocated ₹2,217 crore for 42 urban centres with a million-plus population in this Budget to tackle the problem of air pollution. This, coupled with the vehicle scrapping policy, will go a long way in building an energy-efficient transport ecosystem.

"This is a good move. The fund could be utilised to spread awareness about the benefits of using e-vehicles for the environment and its contribution to make the air clean," Society of Manufacturers of Electric Vehicles' director general Sohinder Gill said.

To add to this, Sitharaman also stressed on raising the share of public transport in urban areas through expansion of the metro rail networks and augmentation of city bus services. "A new scheme will be launched at a cost of ₹18,000 crore to support augmentation of public bus transport services. The scheme will facilitate deployment of innovative PPP models to enable private sector players to finance, acquire, operate, and maintain over 20,000 buses. The scheme will boost the automobile sector, provide fillip to economic growth, create employment opportunities for our youth, and enhance ease of mobility for urban residents," she said.

Gill said that the government’s plan to strengthen the public transport sector under the PPP model "could strengthen the EV [electric vehicles] industry if more number of e-buses could be supported through the scheme. We urge the government to mandate procurement of e-buses under the scheme which would help us fight the issue of air pollution."

However, not everyone in the EV space shares this enthusiasm. Tata Technologies' CEO and MD Warren Harris said, "While it would have been good to see some more initiatives to promote electric vehicles in this Budget, we are glad that the government has noted India’s critical role in the global automotive supply chain post Covid-19."

Jeetender Sharma, founder and managing director at Okinawa Autotech, too, also thought that the government could have done more for the EV industry, like encouraging domestic demand "by further incentivising individual and commercial consumption of EV pan-India. Nevertheless, we are ever so optimistic and certain that this fiscal year will unfold immense growth opportunities and we are geared up for the same," he said.

Sharma said that the Budget effectively sets the road map for the next five years with a slew of measures for overall economic growth.

Many EV makers also feel that this year’s Budget gives a push towards clean energy and a transition towards a green economy. "The outlays to tackle air pollution and the boost to non-conventional energy sectors will be key to reduce dependence on fossil fuels and power the industrial sector and electric transportation. The announcement of the Hydrogen Energy Mission is a step closer for generating power through green sources and fulfil charging requirements of EVs in the future," Saurav Kumar, founder and CEO, Euler Motors, said.