Budget 2023: Will 'green growth' energise equipment demand?

  • Industry News
  • Feb 06,23
Identifying green growth as one of the seven priorities of this year’s budget, Finance Minister Nirmala Sitharaman has announced a slew of measures to achieve energy transition and net zero objectives. But, will these generate demand for equipment and solutions in the country? Let's hear from the industry leaders.
Budget 2023: Will 'green growth' energise equipment demand?

Citing that India is moving toward net zero carbon emissions by 2070 to usher in usher in green industrial and economic transition, Finance Minister Nirmala Sitharaman listed 'green growth' as one of the seven priorities of this year’s budget. Accordingly, a slew of measures were announced in Budget 2023, including initiatives related to green fuel, green farming, green mobility, green buildings, and green equipment. "These green growth efforts help in reducing carbon intensity of the economy and provides for large-scale green job opportunities," said FM Sitharaman.

The push for schemes to speed up India’s sustainable development comes at a time when it is set to achieve net-zero carbon emissions by 2070. India is currently the world’s third-largest emitter and will rely heavily on ramping up renewable energy and green hydrogen fuel to decarbonise in line with its objectives.

In Budget 2023, Sitharaman provided an outlay of Rs 35,000 crore to achieve energy transition and net zero objectives. "To spur a movement for environmentally conscious lifestyle, India is moving firmly for the panchamrit, the net zero carbon emission by 2070, usher in green industrial and economic transition. This budget builds on our focus on green growth," she said during her budget speech.

The Government of India recently launched National Green Hydrogen Mission with an outlay of Rs 19,700 crore to facilitate transition of economy to low carbon intensity, reduce dependence on fossil fuel imports and make the country adopt technology and market leadership in this sector. "Our target is to reach an annual (green hydrogen) production of five MMT by 2030. To steer the economy on sustainable development path, battery energy storage systems with a capacity of 4,000 MWh will be supported with viability gap funding," Nirmala Sitharaman stated while presenting her budget.


Boost for electronics
To facilitate the production of electric vehicles, “customs duty exemption is being extended to import of capital goods and machinery required for manufacture of lithium-ion cells for batteries used in electric vehicles,” Sitharaman said.

With consumption of electronics growing in India manifold in the last 10-15 years, the Government of India has been promoting domestic manufacturing of the same through various policies, including PLI (Production Linked Incentive) Scheme. As a result, the mobile phone production in India has increased from 5.8 crore units valued at about Rs 18,900 crore in 2014-15 to 31 crore units valued at over Rs 2,75,000 crore in the last financial year as a result of various initiatives of the Government, stated Sitharaman while presenting the budget 2023.

Budget 2023 proposes to provide relief in customs duty on import of certain parts and inputs like camera lens and continue the concessional duty on lithium-ion cells for batteries for another year in order to further deepen domestic value addition in manufacture of mobile phones. The BCD on parts of open cells of TV panels has been reduced to 2.5 per cent to promote value addition in manufacture of televisions.

Budget has brought custom duty down to nil on several mobile phone components – camera lens and parts used in the manufacturing of camera module (from earlier 2.5 per cent duty), palladium tetra amine sulphate for manufacturing of parts of connectors and specified items for manufacture of pre-calcined ferrite powder(earlier both were at 7.5 per cent duty).

RE sector
Budget has allocated Rs 10,222 crore toward the renewable energy sector. The outlay is an increase of 48 percent over last year’s allocation of Rs 6,900.68 crore (budget estimate) and 45.3 percent over the revised estimate (RE) of Rs 7,033 crore. This allocation comes at a time when India has set a target to have an installed capacity of 500 GW by 2030.

The Union Budget for 2023-24 has provided for a Budgetary allocation of Rs 7,327 crore for the solar power sector including grid, off-grid, and PM-KUSUM projects. This is a 48 per cent increase over the previous Rs 4,979 crore provided in the Revised Estimates in the document.

IPF spoke to some industry leaders to explain the impact of the budget of energy related sectors and supply chains.

Sharan Bansal: Budget to create demand for T&D products
According to Sharan Bansal, Director, Skipper Ltd, budget FY 23-24 has several measures that will stimulate the growth of the economy while creating numerous employment opportunities. "Increasing capital investment outlay by 33.4 per cent to Rs 10 lakh crore for infrastructure is a welcome move that will facilitate growth of the sector. Rs 2.4 lakhs crore outlay to railways will attract private investment in the sector and boost demand for operational products in the segment. The budget underscores the initiative of setting up a 13 GW transmission system for grid integration, with an investment of Rs 20,700 crores. The Finance Minister has further proposed setting up of 100 labs to effectively develop 5G services. These announcements shall help create demand for products in the T&D and telecom sector, which will be conducive for the growth of relevant companies of these sectors. The budget clearly indicates that the government is committed to propelling infrastructure, engineering and related industries, which will prove to be effective in ensuring the growth of the Indian economy," he added.

Pratik Agarwal: There is incentive for discom reforms
The budget, according to Pratik Agarwal, Managing Director, Sterlite Power, and Director of Serentica Renewables, has laid down a promising path for the nation’s green growth, clearly identified as one of the seven pillars, with sizable outlay of Rs 35,000 crore. "The Finance Minister has also focussed on some of the key issues like battery storage and pumped storage projects to ensure stable and round the clock supplies from renewable resources like solar and wind power. Additionally, the reduction in duties for lithium-ion batteries is a step in the right direction. It has also ushered in a key measure for the financial health of states’ distribution utilities by tying 0.5 per cent of their deficit to power sector reforms. This is an added incentive for the states to reform the DISCOMs. However, along with incentive, a disincentive package for the discoms would have proven beneficial. Power sector also merited a bigger budgetary allocation given it is the fuel that is driving India’s growth engine. Overall, the budget has pushed all the right buttons and is well in line with the macroeconomic goals of the country," he said.

Olivier Loison: Govt wants greater pvt sector participation



India’s economic growth rate is the result of a resilient economy and prudent fiscal policies of the government. "The Union Budget for 2023-2024 continues its focus on this path and the commitment to ‘green growth’ approach, will further boost the economy. Infrastructure is the most critical aspect of any economy and the highest ever capital investment outlay of 10 lakh crores is most commendable. Combined with the enhanced capital outlay of Rs 2.40 lakh crore provided for railways, these steps will go a long way in upgrading infrastructure, assets, systems, and facilities by leveraging technology and promoting a sustainable approach," stated Olivier Loison, Managing Director, Alstom India.

More importantly, the government is promoting greater private sector participation in infrastructure and railways. He elaborated, "This is critical for the growth of the sector as it will help enhancing accessibility and mobility, connecting people and communities, integrating markets, and facilitating trade, and generating greater job opportunities. We are glad to see the continued focus on infrastructure projects to improve connectivity and facilitate movement of goods and products across the country, will support in the development of indigenous industries, thereby contributing to the ‘Make in India’ ambition and making India ‘Aatmanirbhar’. This will lead to an uptake in sustainable and modern urban mobility solutions, like metros, in Tier II & III cities as well. To encourage logistics, we expect more impetus on freight movement by rail, which will create the demand for more electric locomotives of high horsepower, which will increase capacity and speed of goods transportation, while reducing emissions, to bring better efficiencies of scale and attain the vision of net zero emissions."

The National Hydrogen Mission will support India’s ambition of becoming the world’s first Green Railways, with a growing fleet of hydrogen-powered passenger trains. "As the world’s first and only hydrogen train manufacturer with passenger service, we are following with great attention Indian Railway’s interest for hydrogen trains in coming years. Alstom would be glad to contribute to the transition to zero-emission solutions in India," opined Olivier Loison.

Shivaji Waghmare: Budget is growth-oriented



Stating that the budget 2023 is growth-oriented striking a balance between economic growth and social welfare, Shivaji Waghmare, CEO, Fuji Electric India Pvt Ltd, said, "It is great news that the budget has provided Rs 35,000 crores priority capital investment towards energy transition and net zero objectives, and energy security. We appreciate the move to extend customs duty exemption to the import of capital goods and machinery required for manufacturing of lithium-ion (Li-ion) cells for batteries used in EVs. This would reduce the production cost and lower the cost of EVs."

He added, "Manufacturing credit guarantee scheme for MSME is another laudable step. Youth have to be skilled to compete in Industry 4.0 and a lot of measures are being taken to make Indian youth market-ready. More skilling centres would mean more technicians who are very important for industries like us. Reducing the cost of compliances will help reduce the overall cost for the businesses which is a welcome thing. India is going all out to embrace digitalization and also ensure that every segment of its population is taken along in its run towards realising its dream. The increased spends India Railways is a welcome step. I am glad that consumption is being promoted and economy is being revived."

Bhupesh Arora: Budget encourages urban planning reforms
Stating that budget 2023 demonstrates the government's commitment to building and expanding the infrastructure sector to boost the economy, Bhupesh Arora, Business Head, Digital Energy, Schneider Electric India, stated, "This (increase in capex by 33 per cent to Rs 10 lakh crore) will result in more employment creation, increased manufacturing capacities, and the energy sector's active participation in nation building. The budget focuses on states and cities to encourage urban planning reforms and making cities more sustainable. We applaud the government's investment of Rs 35,000 crore to achieve energy transition and net zero goals. As the economy is expected to grow at a 7% annual rate, we feel this budget has taken all of the necessary steps to continue the growth momentum."

Raman Bhatia: Budget focuses on green growth



According to Raman Bhatia, Founder and Managing Director, Servotech Power Systems Limited, the budget 2023 has put a reinstated focus on green growth. He said, "With the FM allocating Rs 35,000 crore towards this sector, prioritising India’s net zero goals and energy transition, this presents players in this space a unique opportunity to make clean energy solutions like solar and EV charging both accessible and affordable for the people, unlocking mass consumerization. This extensive budgetary allocation for the sector coupled with additional production linked incentives for manufacturing high-efficiency solar photovoltaic modules, will lead to significant advances in the country's decarbonization initiatives. In addition, quicker approvals for new storage systems, flexible policies allowing storage structure changes after project commissioning without affecting current initiatives, and capacity building efforts for operators are other areas for consideration that will aid India's accelerated transition to renewable energy. The Union Budget 2023 has hinted that all efforts at decarbonization will need supportive policies that incentivize both finance and technology. Developing large-scale carbon markets and green financing through budgetary allocations will shape up the framework empowering energy producers and providers."

Dr Satish Kumar: Ushering green transition
According to Dr Satish Kumar, President & Executive Director, Alliance for an Energy Efficient Economy (AEEE), the FY24 budget appears to usher a phase of 'green transition', guiding the economy toward a sustainable development pathway. "By focusing on implementing various initiatives to increase energy efficiency and lower carbon intensity, it demonstrates a commitment to foster green growth in the nation. The proposed budget places a strong emphasis on the creation of large-scale green job opportunities to prepare young people for mitigating the effects of climate change. The National Green Hydrogen Mission's outlay of INR 19,000 crore would also support and contribute to green growth and a net zero carbon future. The provision of INR 35,000 crore for energy transformation and net zero emissions would indeed help the nation in achieving its goal of net zero emissions by 2070. India will become a responsible and energy-secure country owing to the Honourable Prime Minister's vision for Lifestyle for Environment (LiFE), which will accelerate the country's transition to a low-carbon economy and lessen dependency on fossil fuels," added Dr Satish Kumar.

Suhas Rajkumar: Budget to enable rapid electrification



Suhas Rajkumar, Founder and CEO, Simple Energy, commented, "The budget for FY24 announced by FM Nirmala Sitharaman is encouraging on a lot of fronts, especially in the space we operate in. One of the key focus areas is Green Growth and the schemes announced are promising and we welcome the optimism ignited by the Finance Ministry in this space. These progressive schemes will surely enable rapid electrification in the country and encourage consumers to transition seamlessly towards green mobility which will help OEMs to script a robust growth story in the domestic market. Furthermore, we congratulate the Government of India on laying down its aim of reaching net-zero carbon emissions by 2070. We will work in alignment with the GoI’s aim to maximize growth opportunities in shaping a greener tomorrow.”

Akshit Bansal: Budget encourages green empowerment
Stating that budget for 2023-24 paves the way for the green empowerment of the country and reflects the progressive attitude of the government toward sustainable development, Akshit Bansal, Founder & CEO of, Statiq, said, "We welcome the vision of the government of India in establishing and boosting the focus on green growth. As India’s new budget envisions 7 priorities, green growth is among the top priorities of it. In its budget, the government has announced a large sum of Rs 35,000 crore to be allocated towards achieving the net zero goal and energy transition. The government has set its target to reach green hydrogen production of 5 MMT by 2030. This will encourage the private sector involved in green renewable energy-based products to expand their business and invest more in the business of green energy. The government’s green growth efforts will help in reducing carbon impact, promote green alternatives and create space for employment. It will enable the use of green-based products at a larger scale among the common public. The government’s green signal to green growth will give an edge to companies like electric vehicle manufacturers to market their products and enhance the opportunities for industry players to cater to their target audiences. This will also help in meeting the carbon offset program of various companies in the green sector.”

Olivier Loison, Managing Director, Alstom India
To encourage logistics, we expect more impetus on freight movement by rail, which will create the demand for more electric locomotives of high horsepower. This will increase capacity and speed of goods transportation, while reducing emissions.

Pratik Agarwal, MD, Sterlite Power
It has also ushered in a key measure for the financial health of states’ distribution utilities by tying 0.5 per cent of their deficit to power sector reforms. This is an added incentive for the states to reform the DISCOMs.

Shivaji Waghmare, CEO, Fuji Electric India Pvt Ltd
India is going all out to embrace digitalization and also ensure that every segment of its population is taken along in its run towards realising its dream. The increased spends India Railways is a welcome step. Raman Bhatia, Founder and MD, Servotech Power Systems Ltd
Quicker approvals for new storage systems, flexible policies allowing storage structure changes after project commissioning without affecting current initiatives, and capacity building efforts for operators are other areas for consideration that will aid India's accelerated transition to renewable energy.

Suhas Rajkumar, Founder and CEO, Simple Energy
One of the key focus areas is Green Growth and the schemes announced are promising and we welcome the optimism ignited by the Finance Ministry in this space. These progressive schemes will surely enable rapid electrification in the country.

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