Finance minister Nirmala Sitharaman presented the Union Budget 2024-25 in the Lok Sabha today. For the renewable energy sector, especially solar, the budget gives a fillip to manufacturing by announcing exemption on basic customs duty (BCD) for specified machinery/equipment used in the manufacture of solar cells and modules. These machines earlier attracted a 7.5% customs duty. Duty exemption on these equipment will lower the costs for solar cell and module manufacturers.
Import duty (BCD) exemption has been extended for specified goods used in the manufacture of silicon wafers, specified material for manufacture of EVA (ethylene vinyl acetate) sheets, and flat copper wire for use in the manufacture of photovoltaic ribbon. These are now exempted from BCD up to March 31, 2026. Further, the scope of materials which can be imported is being expanded.
On the other hand, solar glass for manufacture of solar cells or solar modules will attract 10% customs duty from Oct. 1 this year. Tinned copper interconnect for manufacture of solar cells or solar modules will also attract 5% customs duty from Oct. 1.
“In view of sufficient domestic manufacturing capacity of solar glass and tinned copper interconnect, I propose not to extend the exemption of customs duties provided to them,” said the finance minister in her budget speech.
Customs duty exemption on active energy controller (AEC) for use in manufacture of renewable power system inverters will also lapse from September 30.
To boost battery manufacturing, BCD exemption for parts and raw material for use in the manufacture of lithium-ion cells is being extended up to March 31, 2026. Specified parts and components for use in Lithium-ion battery and battery pack production are also exempted from BCD up to March 31, 2026. Lithium, copper, and cobalt have been exempted from customs duty.
On the solar installation front, the finance minister announced an INR 6,250 crore allocation for residential rooftop solar scheme PM Suryaghar Muft Bijli Yojana in 2024-25. “In line with the announcement in the interim budget, PM Surya Ghar Muft Bijli Yojana has been launched to install rooftop solar plants to enable 1 crore households obtain free electricity up to 300 units every month. The scheme has generated remarkable response with more than 1.28 crore registrations and 14 lakh applications, and we will further encourage it,” said the minister.
The minister stated that a policy for promoting pumped storage projects will be brought out for electricity storage and facilitating smooth integration of the growing share of renewable energy with its variable and intermittent nature in the overall energy mix.
Further, a roadmap for moving the ‘hard to abate’ industries from ‘energy efficiency’ targets to ‘emission targets’ will be formulated. Appropriate regulations for transition of these industries from the current ‘perform, achieve and trade’ mode to ‘Indian carbon market’ mode will be put in place.
The minister said, the government will partner with the private sector for setting up Bharat Small Reactors, research & development of Bharat Small Modular Reactor, and research and development of newer technologies for nuclear energy. The R&D funding announced in the interim budget will be made available for this sector.
She said, “we will develop a taxonomy for climate finance for enhancing the availability of capital for climate adaptation and mitigation. This will support achievement of the country’s climate commitments and green transition.”
Industry reaction
Solar glass manufacturer Borosil Renewables welcomed the levy of 10% basic customs duty on imports of solar glass with effect from October 2024. “This is sought to be achieved by the withdrawal of the exemption from payment of basic customs duty available on import of solar tempered glass (whether or not coated with anti-reflective coating) for use in the manufacture of solar cells/panels/modules after September 30, 2024. This proposal is subject to Parliament’s final approval of the Union finance bill in due course. This is a welcome step towards creation of a level-playing field for domestic solar glass manufacturers and is consequently set to benefit the company,” stated Borosil Renewables.
Hailing the budget, Sumant Sinha, founder, chairman and CEO, ReNew, said, “The Union Budget 2024 has undeniably taken forward the Prime Minister’s commitment towards India’s clean energy transition. The Finance Minister’s announcement that the Government will release a policy document on India’s energy transition pathway and policy on pumped storage will provide much needed long-term clarity for investments across the value chain. The continuation of the PM Surya Ghar Muft Bijli scheme, on the back of an overwhelming response for its subscription, underscores the growing appetite for clean energy solutions among citizens, aligning perfectly with our national sustainability goals.”
“With nuclear energy poised to be a cornerstone of our energy mix, and innovative nuclear technologies being developed in partnership with the private sector, the future looks promising. With continued policy support, accessible financing, and robust public participation, I am confident that we will achieve our renewable energy aspirations for a cleaner, more resilient, and economically vibrant India,” he added.
SK Gupta, CFO, AMPIN Energy Transition, said, “Exemption of custom duty on import of specified equipments for manufacture of solar cells and modules is a welcome step and will help further promote in house manufacturing of the same in the country. Move for custom duty exemptions on import of lithium and other related chemicals will promote battery storage solutions for better integration for providing RTC.”
While appreciating the above policy framework, Gupta urged for classifying renewable industry as a part of ‘priority sector lending,’ rationalization of indirect tax (GST rates) on turbines and modules to be 5% each against existing 12%, exemption of ALMM for corporate &industrial projects, greater push on developing and promoting in house R & D facilities for development of latest technologies for cell, module manufacturing and their backward integration, and promoting in-house manufacturing of capital goods for the industry to avoid reliance on imports from third countries.”
“Renewable being a continuously growing industry, providing clean energy at competitive rates, the government should reconsider extending concessional tax rates for new projects for a further period of two years,” he added.
Amit Jain, global chief executive officer – Sterling and Wilson Renewable Energy Group, said, “The recent budget announcement is an acknowledgement of the industry’s huge potential in terms of meeting India’s global sustainability commitments, ensuring the nation’s long term energy security, and providing access to affordable and clean power source for the people. We commend the government’s move to support energy transition by expanding the list of exempted capital goods for use in the manufacture of solar cells and panels in the country. The PM Surya Ghar Muft Bijli Yojana which involves installation of rooftop solar plants to enable one crore households obtain free electricity is a step in the right direction and shall promote a more sustainable future.”
“The announcement to fully exempt 25 critical minerals and reduce BCD on two of them will assist the renewable energy sector, since it shall provide a major fillip to the processing and refining of such minerals and help secure their availability. The proposed policy to promote pumped storage projects for electricity storage will help facilitate smooth integration of growing renewable energy share thereby reducing challenges posed by its variable and intermittent nature. Expansion of India’s renewable energy infrastructure – both greenfield and brownfield will require skilled workforce to ensure efficient project execution, while reducing cost and time overruns. We therefore welcome the government’s focus towards upskilling 20 lakh youth over a 5-year period and upgrading 1,000 Industrial Training Institutes.”
Amit Jain, CEO and country manager, ENGIE, India, said, “The government deserves commendation for prioritizing energy security as one of its Nine Priorities in the Union Budget 2024. By focusing on the availability, accessibility, and affordability of energy, the government is laying a strong foundation for a Viksit Bharat by 2047. The proposed policy document on appropriate energy transition pathways, as announced in the budget, will further address the critical imperatives of employment, growth, and environmental sustainability in India.”
Jain added, “The budget has further strengthened the energy transition journey by expanding the list of exempted capital goods for manufacturing domestic solar cells and panels. This will boost domestic manufacturing of solar cells and panels, further secure supply chain and help India achieve its target of 280 GW of solar power by 2030. The proposed policy framework for promoting pumped storage projects will promote hybrid renewable projects, which will be a key step towards ensuring round the clock electricity.”
Manikkan S, executive director and CEO, Radiance Renewables, “The recent budget announcements by the Finance Minister reflect a strong and consistent commitment to renewable energy, building upon the foundation laid by the Modi 2.0 government. The launch of the PM Surya Ghar Muft Bijli Yojana is a significant step towards reducing our dependence on fossil fuels and aligning with global climate goals…We are also encouraged by the government’s decision to partner with private energy companies and provide substantial R&D funding for new energy technologies. This will drive innovation and support the development of critical materials essential for the sector’s growth. Overall, this budget sets a robust framework for advancing India’s clean energy transition, enhancing investor confidence, and promoting sustainable development.”
Pashu Gopalan, president and CEO of Fenice Energy, lauded continued support to the PM Surya Ghar Muft Bijli Yojana and highlighted the need for inclusion of community solar. “The program [PM Surya Ghar Muft Bijli Yojana] in its current shape benefits both the rich and the poor equally, giving them the benefit of free solar electricity, up to a certain extent. Unfortunately, the poor that consume 100-300 units/month do not necessarily have a roof that is shade free and conducive to rooftop solar. Unless the program evolves to allowing community solar, the poor will be left behind. The other major issue which will unravel is the quality of the systems being installed, which if not paid attention to, the public will be cheated in large numbers and the government’s intended purpose will be defeated. In today’s day and age, every solar system can be monitored for its performance very economically and such situations have to be proactively avoided. The MNRE officers are very capable and will steer the program through the issues,” said Gopalan.
“The proposed allocation of INR 1.48 lakh crore for education, employment, and skilling is a visionary step that is expected to empower the youth and foster a culture of innovation across all sectors. Another notable aspect of the budget is the emphasis on higher participation of women in the workforce. The solar manufacturing sector is expected to experience a revolutionary shift, as the involvement of women in this field has historically been lower compared to their male counterparts,” added Paithankar.
Ishver Dholakiya, MD and founder, Goldi Solar, said, “The Union Budget 2024 is a forward-looking and progressive plan. The government’s focus on climate risk mitigation, women’s workforce development, and energy security positions India as a leader in sustainable development. Exempting capital goods for solar manufacturing will reduce costs and boost domestic production. The PM Suryaghar Muft Bijli Yojana, offering up to 300 units of free electricity monthly to 1 crore households, will enhance rooftop solar adoption.”
Gyanesh Chaudhary, CMD, Vikram Solar Ltd, said, “This budget is a catalyst for the growth of the Indian solar industry, empowering millions of households with access to affordable and clean electricity. Moreover, by supporting ancillary sectors like pump storage and creating a conducive environment for innovation through tax incentives for solar cell and panel manufacturing, the budget has laid a robust foundation for India’s energy transition.”
Sameer Gupta, chairman & managing director, Jakson Group, said, “The PM Suryaghar Muft Bijli Yojana, aimed at installing rooftop solar panels in 1 crore households to provide 300 units of free electricity, is transformative in making sustainable energy accessible. This will boost solar adoption in the residential sector and drive economic growth. Special attention has been given to MSMEs and manufacturing. The support includes a Credit Guarantee Scheme, term loans for machinery, and technology financing packages. These measures will help MSMEs scale up and enhance competitiveness.”
“The budget also prioritizes infrastructure development with long-term interest-free loans to states and significant project allocations, enhancing connectivity, economic activities, and overall quality of life across the nation. Additionally, the simplified rules for foreign direct investment and overseas investment will open new avenues for global expansion, attract international investments, and enhance our global footprint.”
Girish kumar Kadam, senior vice president & group head – Corporate Ratings, ICRA Ltd, said, ”The budget’s focus on measures on green energy continues to reinforce the commitment towards achieving energy transition in the long run. The increased allocation to the solar power sector, including the promotion of the rooftop solar scheme, will aid the renewable capacity addition in the country. Further, the measures to promote the availability of critical minerals are expected to support the development of battery energy storage projects and reduce the cost of storage in the long run. This, along with the policy to promote the development of pumped storage projects, would facilitate the integration of renewables with the grid. However, timely implementation of policy measures remains key.”
“Pumped storage for power is another vital area with the potential for substantial savings and more efficient power generation utilization. We expect the new policy introduced by the Finance Minister in today’s budget to attract further investments and create new opportunities for manufacturers.”
Gautam Mohanka, CEO of Gautam Solar, said, “Achieving 1.28 crore registrations and 14 lakh applications through the PM Surya Ghar Muft Bijli Yojana scheme is a remarkable feat indeed. We at Gautam Solar are aligned with the Prime Minister’s vision of “Vocal for local,” which opens new growth avenues for indigenous players and are committed to supporting the country’s renewable energy goals by employing our capacities for optimal returns.”
Preeti Bajaj, MD and CEO, Luminous Power Technologies, said, “The budget announcement has provided the much-needed boost to the energy sector underscoring the commitment to energy security and sustainability. While the interim budget announced a strategy to sustain high and more resource-efficient economic growth, and security in terms of availability, accessibility, and affordability, the renewable energy players will be awaiting the policy document on appropriate energy transition pathways. The PM Surya Ghar Muft Bijli Yojana is a revolutionary initiative that has garnered an overwhelming response…This sets a strong precedent for sustainable energy adoption in India. The Government’s proposal to expand the list of exempted capital goods used in the manufacturing of solar panels is a significant step towards promoting solar energy and driving the energy transition.”
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