By balancing economic growth with environmental responsibility, the budget boosts India’s long-term energy transition and reinforce its commitment to a greener future
While FM Nirmala Sitharaman’s budget is tailored to drive consumption, propel long-term growth, and reinforce India’s commitment to a greener world, proposals to power India’s journey towards sustainability and net zero through various energy sector reforms, policies, and incentives stand out as they provide for a transformative shift in India’s energy landscape. India’s demand for power will continue to increase.
The country has set an ambitious target of achieving net zero by 2070, a tall order. The power sector accounts for nearly one-third of India’s total greenhouse gas emissions. While a country like India can’t eliminate its reliance on coal-fired power with one stroke, transformative reforms in the power sector couldn’t and must not wait.
The path to carbon neutrality has to be paved with renewables. The Budget has provided the much-needed push to nuclear energy with the target of achieving 100 GW capacity by 2047 as part of India’s long-term energy transition strategy and achieving long-term economic and environmental goals.
The government wants to position nuclear energy as a significant pillar of the energy mix. This aligns with India’s broader objectives of a Viksit Bharat that will be less reliant on fossil fuels. The proposal to launch a Nuclear Energy Mission will promote domestic capabilities, private sector participation, and enhanced deployment of advanced nuclear technologies such as small modular reactors.
With an outlay of Rs 20,000 crore for promoting research and development of SMRs, the government targets developing at least five indigenously designed and operational SMRs by 2033. The government will also bring in necessary amendments to the Atomic Energy Act and Civil Liability for Nuclear Damage Act to facilitate the Mission and encourage private sector participation in nuclear power projects. This is a great initiative! The Budget proposal to incentivise electricity reforms and augmentation of inter-state transmission capacity by states will advance power distribution companies’ financial health and capacity. Upon meeting the reforms initiated under the revamped distribution system scheme, states can borrow an additional 0.5 per cent of their gross domestic product over and above what they get under the FRBM Act.
This will significantly improve the efficiency of the power sector. These reform measures are part of the government’s plans to support clean technology. The government also intends to promote clean tech manufacturing to improve domestic value addition and build a local ecosystem for solar cells, electrolysers, wind turbines, high-voltage transmission equipment, and grid-scale batteries, among other technologies. The Budget marks a transformative step for India’s renewable energy sector. The government’s commitment to the ‘Make in India’ initiative and the new clean tech manufacturing policy will augment the development of solar PV cells, batteries, and other sustainable technologies locally in India.
These moves will contribute to the nation’s clean energy journey while fostering sustainable economic growth. The full BCD exemption of the scrap of lithium-ion batteries, Lead, Zinc, and 12 more critical minerals will help boost battery manufacturing in India and promote more jobs for our youth.
By reducing the BCD on solar panels by half to 20 per cent, the FM has provided animal spirits to the wind energy sector, which would further reduce the price of the panels and reduce India’s imports by facilitating domestic production.
The increased allocation for solar power to promote rooftop solar projects is positive for solar module manufacturers and will boost RE capacity.
(The writer is Director, Shirdi Sai Electricals Ltd; views are personal)