Energy and Renewables Sector Expectations from Budget 2023-24

1. Nil Import Duties: PHD Chamber of Commerce and Industry (PHDCCI) believes that the import duty on electrolyzers used for splitting water to produce hydrogen should be brought to nil. At present, customs import duty on electrolyzers as apparatus for electroplating and allied processes is estimated at 23.55%. Such a change shall significantly impact the investment in the Green Hydrogen arena and India can be expected to become an export hub by 2030.

2. Production-Linked Incentives for Wind Turbine Generators: One of the many considerable recommendations ahead of Union Budget 2023-24 is the introduction of the PLI Scheme for Wind Turbine Generators and Equipment Manufacturing on similar lines to the Solar PLI Scheme. Such a scheme must bring taxes on biofuels to nil, and charge zero GST on green cement and steel. The GST rate rationalization mechanism must be based on a three-tier structure, where such a transition of items of rates another must focus on— one, promoting renewable and two, plastic recycling. Such a framework ascertains that the merit rate also has an environmental dimension and fixing the rate for individual items becomes more transparent and based on broad principles.

3.?Reintroduction of Duty Benefit on Key Components: As per MNRE’s notification to withdraw the customs duty benefit of 2.50% from 1st April 2023, the market participants believe that this will be a loss to the industry. It is recommended that Budget 2023 must introduce unconditional and perpetual duty rebates of 2.50% on key components, especially the ones specific to turbines that are not available in the local market.

4. Clearer Taxonomy for Green Bonds: The debut of Sovereign Gold Bonds has created a wave that is headed towards creating a very robust green economy. In alignment with this goal, the market is eager to learn taxonomies for green bonds to be raised by the private sector. The government, in the Union Budget of 2023-24, must also incorporate subsidization of green consumerism and production. At present, India does not inhabit a specific framework for carbon pricing yet.

Sources: Business Standard, Financial Express, The Economic Times, Invest India

Sources: Business Standard, Financial Express, The Economic Times, Invest India