By Raaja Kanwar
India is at a crucial juncture in its quest for sustainable development. The upcoming Union Budget 2024 offers a significant opportunity to push us further towards a greener future. For India to emerge as a global leader in the green economy, our government needs to emphasise sustainable growth, energy security, and environmental stewardship in its financial planning.
The green energy sector in India has already shown remarkable progress, largely due to initiatives like the Production Linked Incentive (PLI) schemes aimed at boosting domestic manufacturing and enhancing the competitiveness of Indian companies. Yet, to truly realize the potential of this sector, we must tackle key challenges and implement focused measures that encourage the widespread adoption of clean energy solutions.
One effective strategy would be to reduce the Goods and Services Tax (GST) on renewable energy components from 18% to 5%. This reduction would lower project costs, making investments more attractive and speeding up adoption. According to a study by the Institute for Energy Economics and Financial Analysis (IEEFA), this change could result in a 15% increase in renewable energy installations by 2030.
Encouraging foreign competition by opening the market to international module manufacturers would also foster innovation, reduce prices, and improve component quality. Currently, solar module prices in India are about 25-30% higher than global prices due to import restrictions and high tariffs. Creating a level playing field and promoting a competitive environment will ensure the sustainable growth of the green energy sector.
Also read: Budget 2024: Will green power be a priority? Experts say incentives important
Additionally, lifting the requirement for procuring solar modules from the Approved List of Models and Manufacturers (ALMM) for the commercial and industrial sectors would be wise. Given the limited capacity of ALMM-approved companies and the lack of direct subsidies, relaxing this mandate would boost domestic production capacity and stimulate market growth.
Ensuring a reliable power supply and a stable grid is essential as India transitions to a greener future. Budget 2024 should prioritize incentives for Round-The-Clock (RTC) power projects and investments in battery storage. The Central Electricity Authority (CEA) estimates India will need 27 GW of battery storage capacity by 2030 to meet its renewable energy targets.
These investments will spur private sector innovation, enhance grid resilience, and meet the nation’s growing energy demands. The commitment to investing over USD 360 billion in renewable energy infrastructure by 2030 is commendable. To achieve this target, Budget 2024 must allocate sufficient funds and introduce policies facilitating private sector participation. Innovative financing instruments like green bonds, which have raised over USD 21 billion as of February 2023, will be crucial in mobilizing capital for sustainable projects. The budget should also explore ways to make these financing options more accessible to investors.
A Call to Action
As we approach Budget 2024, we must ask ourselves: What kind of legacy do we want to leave for future generations? Will we seize this opportunity to lead the world in sustainable development, or will we falter in the face of challenges? The decisions we make now will shape our future. Budget 2024 is not just a financial plan; it’s a chance to redefine our nation’s priorities and set a course for a greener, more sustainable India. The time for action is now.
(The author is the Chairman and Managing Director of Apollo International Group. Views expressed are the author’s own and not necessarily those of financialexpress.com.)
