We are thrilled to welcome our guest author, Vineet Mittal, Chairperson, Avaada Group, to share his expertise and insights on ‘Budget 2023-24: GoI’s Green Push to Accelerate India’s Energy Transition’. In this post, he will provide valuable insights on India’s path towards sustainable growth and the crucial role of energy transition in achieving it. We are confident that Vineet’s unique perspective and expertise will provide immense value to our readers.
India’s renewed commitment to green growth assumes greater significance, especially when it holds the G20 Presidency. Finance Minister Nirmala Sitharaman has re-emphasized India’s goal of becoming net zero by 2070 by introducing a series of green initiatives during her Union Budget 2023-24 speech. Showcasing ‘green growth’ as one of the seven priority areas or ‘Saptarshi’ in this year’s Budget displays the Government’s commitment towards consistency in the policy initiatives with a focus on the UN Sustainable Development Goals (SDGs).
The Budget has laid a clear roadmap towards attracting new investments into the country to help build the green economy keeping the energy transition in mind. The initiatives would help increase job creation in the energy sector and accelerate the energy transition towards building a sustainable economy.
Removing roadblocks and creating roadmaps
The industry has long advocated for harnessing Ladakh’s high solar energy potential. The Finance Minister’s announcement to construct an inter-state transmission system (ISTS) for the evacuation and grid integration of 13 GW of renewable energy from Ladakh with an investment of Rs 20,700 crore, including central support of Rs 8,300 crore, will prove to be a boon for the energy sector. This would play a significant role in expediting India’s energy transition journey.
Apart from laying the foundation stone for attracting huge investments, the priority CapEx allocation of Rs 35,000 crore towards energy transition, net zero objectives and energy security will have a green multiplier effect across industries.
Additionally, India is uniquely positioned to attract investments in the green ammonia and hydrogen sectors. With greater emphasis on India’s policies in these sectors, they are expected to attract around $20 to $25 billion in equity investment, translating into $100-120 billion worth of new projects. Combining this with an incremental capacity addition of close to ~400 GW target of solar, wind, and pumped hydro energy in the next seven years will attract at least half a trillion worth of investments and create job opportunities.
An extension of customs duty exemption to capital goods imports and the machinery required to make lithium-ion (Li-Ion) cells for EV batteries, along with adequate fund allocation for vehicle scrapping, will provide further impetus to greening the economy.
Additionally, viability gap funding (VGF) for battery storage projects with a capacity of 4,000 MWh, grid expansion outlays, and the green credit programme to incentivize sustainable behaviour are timely measures to accelerate green and clean energy adoption.
Infrastructure push and circular economy
Announcing a steep increment of 33% in capital investment outlay for the third year in a row to Rs 10 lakh crore, which would be 3.3% of GDP, showcased the Government of India’s aim to uphold India’s position as a strong global leader when the entire world is grappling with inflation.
The central Government has increased its focus on expanding the state’s infrastructure capacity over the years. This year, they have tried to localize the industries to increase demand creation and resolve supply chain limitations by announcing interest-free loans for 50 years and incentivizing them for complementary policy actions.
With an investment of Rs 10,000 crore, the Budget also highlighted the need for adopting a circular economy through the GOBARdhan (Galvanising Organic Bio-Agro Resources Dhan) scheme. Under this scheme, the Government plans to build 500 new ‘waste-to-wealth’ plants. These will include 200 compressed biogas (CBG) plants, of which 75 will be in urban areas and 300 community-based or cluster-based plants.
Finance Minister also proposed the PM Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth or PM-PRANAM initiative to incentivize states and Union Territories to promote alternative fertilizers and balanced use of chemical fertilizers. The Budget also highlighted the recently launched National Green Hydrogen Mission, with an outlay of Rs 19,700 crores to facilitate the economy’s transition to low carbon intensity. The announcement of a 15% concessional tax to promote the new manufacturing cooperative society until 2024 could align with PLI schemes since factories take at least three years to come to fruition.
Overall, the Budget 2023–24 is a shot in the arm for greening the Indian economy by encouraging the renewable energy industry. These announcements and Green Hydrogen Mission will help India achieve its net zero targets. A clear focus on a green economy and policy consistency with an emphasis on sustainable development goals will ensure that green methods will become a way of life in India in the times to come. Business leaders must dive in and do everything they can to make this a reality – especially when the environment is in their favour.