Although several rumours are hovering around this year’s Union Budget, it cannot be denied that this is a perfectly future-oriented budget. When the entire global economy is passing through a transitioning phase, India cannot be an exception. Thus, contrary to the expectation of presenting a populist budget before the pending elections in five states, our Finance Minister (FM) Nirmala Sitharaman has delivered a future-focused annual budget.
Although I am not a budget expert, I understand the need of the hour in our Electrical (Power) industry, and from that point of view, I find this is a highly supportive budget for the fundamental growth of our industry – and of course considering a long time frame. Thus, I will first highlight the key supportive points for our industry then I will keep a few comments from the industry forerunners.
A few key points in favour of the electrical industry
As our government’s entire planning is focused on transitioning towards a Carbon Neutral Economy, the budget presented this year gives a proper indication to that. Let us now have a brief look at what Annual Budget 2022-23 has offered to our electric power industry:
- Co-firing of 5% to 7% biomass pellets in thermal power plants has been proposed by Union Minister that will result in CO2 savings of 38 MMT annually. This will also provide extra income to farmers and job opportunities to locals and help avoid stubble burning in agriculture fields.
- Four pilot projects for coal gasification and conversion of coal into chemicals required for the industry have also been proposed to evolve technical and financial viability.
- Energy efficiency and saving measures through setting up of Energy Service Company (ESCO) business model in large commercial buildings will also facilitate capacity building and awareness for energy audits, performance contracts, and common measurement & verification protocol.
- Considering the constraint of space in urban areas for setting up charging stations at scale, a battery swapping policy will be brought out and interoperability standards will be formulated. The private sector will be encouraged to develop sustainable and innovative business models for ‘Battery or Energy as a Service’. This will improve efficiency in the EV eco-system.
- As a part of the government’s overall market borrowings in 2022-23, sovereign Green Bonds will be issued for mobilizing resources for green infrastructure. The proceeds will be deployed in public sector projects, which help in reducing the carbon intensity of the economy.
Lauding the effort of our FM, Union Minister for Power and MNRE, R. K Singh has said, “Congratulations to Finance Minister on a forward-looking Union Budget 2022-23. Aatmanirbhar Bharat Ka Budget of 2022 has laid the blueprint for India’s Amrit Kaal, covering areas like infrastructure, digitization, agriculture, fiscal management, technology & manufacturing. Budget 2022 is a step towards innovative & sustainable development in new India to strengthen our Energy Transition journey and fight climate change.”
Union Minister forPower and MNRE,
R. K. Singh
Source: PIB
Reactions from IEEMA managing committee
Indian Electrical and Electronics Manufacturers Association (IEEMA) has welcomed the Union Budget 2022, and termed it as progressive and growth oriented. According to IEEMA, some of the welcome features of the Union Budget 2022 include a clear emphasis on energy transition through various measures viz: boost to solar energy, storage, battery and e-mobility. This will pave the way to achieving India’s commitment on tackling clean energy and tackling climate change. This shows a pathway to the Government vision for India@2047.
Reacting on the budget Vipul Ray, President – IEEMA, said, “IEEMA welcomes the Union Budget 2020. Its clear focus on transition on energy transition through various measures that give boost to solar energy, storage, battery and e-mobility will pave the way to achieving India’s commitment on tackling clean energy and tackling climate change. The zero fossil fuel policy, battery swapping policy and focus on charging infrastructure for EV ecosystem will provide the impetus to a future ready electrical and allied electronics sector.”
Vipul Ray, President – IEEMA
IEEMA has welcomed the increased focus on infrastructure through Gatishakti master plan and Atmanirbharata in Defence that will open up more business opportunities for electrical and allied electronics industry. Ray further added, “The introduction of e-Bill System for reducing delays in payments is a progressive step. IEEMA thanks the Hon’ble Finance Minister for her announcement allowing use of surety bonds as a substitute for bank guarantee as acceptable in Government procurements. This will improve the working capital of suppliers and work contractors. This has been IEEMA’s long standing demand.”
Rohit Pathak, Senior Vice President, IEEMA
Rohit Pathak, Senior Vice President, IEEMA, said, “We are happy that the Union Budget maintains the continuity of focus on increased infrastructure spending coupled with AtmaNirbharta. To facilitate domestic manufacturing and to meet the ambitious goal of 280 GW of installed solar capacity by 2030, the additional allocation of Rs 19,500 cr for Production Linked Incentive scheme (PLI) for manufacturing of high efficiency modules is very welcome step. The idea to facilitate funding for clean energy projects and further targeted PLIs for e-mobility and clean energy value chain have the potential to change the course of India’s energy roadmap.”
Hamza Arsiwala, Vice President, IEEMA
Hamza Arsiwala, Vice President, IEEMA, stated, “Battery swapping and support for distributed renewable energy projects are also critical announcements. Distribution sector is critical to achieving the vision of clean energy transition. Overall, this is a budget that we welcome with enthusiasm.”
Supushpa Kaushal, Chairman, Economic & Taxation Cell – IEEMA said, “The budget is a fine balance to support economic recovery. The inclusion of green bonds in the borrowing plan is an interesting innovation. In terms of specific policy announcements, the move towards self-reliance through shield for domestic manufacturers i.e., calibration of custom rates to boost manufacturing of electronics, including smart meters supports the long-term goal of AatmNirbhar Bharat.”
Charu Mathur, Director General – IEEMA cited, “This is a progressive budget with emphasis on Renewable sector, Digitalisation, EV and investment on infrastructure projects will create huge opportunities for our IEEMA members to scale up their Business.”
A few opinions from the players in the power industry
Expressing his view on the future prospect, Tejas Kusurkar, Co-founder and CEO, Offgrid Energy Labs, said, “Budget 2022 has laid a strong emphasis on promoting digital and technological innovations across sectors. The three identified focus areas of technology-led development, energy transition and climate action will create a conducive environment for deep tech innovators operating at the intersection of technology and energy to flourish in the country. An allocation of Rs 19,500 crores towards solar energy PLI schemes will spur large-scale demand for the next level of stationary-energy-storage capacities. This will unravel an entirely new ecosystem comprising of battery technology innovators, energy storage platforms, as well as manufacturers and service providers across the energy value chain. At Offgrid Energy, we are particularly excited at prospects unfolding for deep tech companies in the energy storage space.”
Tejas Kusurkar, Co-founder and CEO,
Offgrid Energy Labs
Appreciating the proposed steps to ensure sustainability in the budget, Mahesh Palashikar, President, GE South Asia, said, “I am happy to see this year’s Union Budget laying down a blue print for sustainable development in the future. We applaud the Govt. for its consistent commitment and sharp focus on the important priorities of improving climate change and accelerating energy transition. The suggested framework around Gati Shakti (infrastructure development) and inclusive development will lay a good foundation for long-term infrastructure with an eye on short term economic and job growth. We also welcome the actions on national Digital Health mission.
Mahesh Palashikar, President, GE South Asia
The launch of the sovereign green bonds is an evidence of the Government’s active support to ‘Green,’ which will significantly help reduce the carbon intensity in the years to come. For India to achieve its climate goals, financing is the need of the hour. This will require deep public-private partnerships. We at GE, have been investing in sustainable technologies for decades. We welcome the encouragement to private industry for taking up the design and development of military platforms and equipment in collaboration with DRDO. We are committed to bringing those technologies in the areas of sustainable aviation, green hydrogen, emission controls and decarbonization to India to support the country’s goals.”
Expressing his satisfaction, Gyanesh Chaudhary, Vice Chairman & Managing Director, Vikram Solar Ltd., said, “The Union Budget 2022-23 is visionary and action oriented. The key measures announced in the budget towards enabling ease of doing business, climate action, digital economy, strengthening the start-up ecosystem, job creation and supporting industrial growth, will propel a strong growth momentum.
Gyanesh Chaudhary, Vice Chairman &
Managing Director, Vikram Solar Ltd.
The Budget 2022 is growth focused with clear roadmap for infrastructure. The PM Gati Shakti master plan focusing on seven growth engines and four big priorities, including the Energy Transition and Climate Action will bring transformational changes and accelerate India’s green energy growth. The increase in capital expenditure by 35.4%, as a pump-priming measure, is a significant boost for employment generation.
We are glad the finance minister, continued to focus on enabling India’s clean energy transition. We welcome the additional PLI allocation of INR 19,500 crore for manufacturing high-efficiency solar modules for the existing wait-listed PLI bidders. This will strengthen the domestic solar manufacturing ecosystem, thereby reduce our import dependence, create jobs, attract investments and enable the Make in India vision. Additionally, the sovereign green bonds will boost green infrastructure development which will help in meeting India’s carbon emission reduction targets. Green bonds will also enable international yield curve for Indian corporates leading to better pricing for bonds. The battery-swapping policy with interoperability standards will boost the Electric Vehicle (EV) ecosystem.
As domestic solar manufacturers, we are appreciative of the Government’s focus towards strengthening domestic solar industry by notifying the Basic Custom Duties on solar modules and solar cell effective 1st April 2022. We are confident, with the implementation and roll-out of the measures announced in Budget 2022, we will move closer towards realizing the Aatmanirbhar Bharat vision in solar sector and India’s Energy Security through green power.”
Final remark
While mitigating global climate change was posing enormous challenge to the world, and with the strong leadership of our prudent Prime Minister Narendra Modi, we were progressing well to tackle the challenges, suddenly the spread of COVID-19 decelerated and (to some extent) disrupted the growth momentum in the last almost two years. With this background, the Union Budget 2022-23 has not only focused on speeding up the effective development of the nation but also planned ways to build its indigenous all round capability. It is time to watch how smoothly and speedily the Government can implement the proposals.
By P. K . Chatterjee (PK)
