As India readies to be a global economic powerhouse, the Union Budget 2024 presents a critical juncture to draw in substantial investments. Creating an enabling environment is vital for sustaining our growth trajectory, particularly in sectors like renewable energy, and e-mobility. The following strategic measures can significantly enhance India's allure to investors.
Simplify GST structures
A crucial step is the reduction of the GST rate for renewable energy projects. Changing the prevailing supply and services ratio for renewables projects from 70:30 to 90:10 will lower the effective GST ratio by 120 basis points and help reduce tariffs and accelerate adoption of renewable energy.
Rationalise import duties
Reducing import duties on solar cells to zero for end-users committed to using a certain percentage of domestic cells can be transformative for the renewable energy sector. This policy would enable developers to utilise low-cost foreign cells while fostering the growth of Indian manufacturing. By blending zero-duty imported cells with domestic ones, as determined quarterly by the government, project costs and power purchase agreement (PPA) tariffs can be lowered, propelling India towards its 500 GW goal by 2030.
Extend waivers and incentives
Extending the waiver for interstate transmission charges by two years, from June 2025 to June 2027, coupled with a mandate for developers to procure storage capacity, is another critical catalyst. This extension would benefit capacity installed post-FY25, facilitating faster adoption of renewable energy projects and ensuring grid stability.
Guarantee off-take and connectivity for CBG projects
Guaranteeing an off take of CBG from project commissioning and ensuring upfront gas grid network availability is essential. These measures would streamline financial closures and enhance project viability, drawing investments into the CBG sector.
Promote e-mobility
The e-mobility sector stands to gain significantly from mandates requiring national and state highways to transition to e-highways, with priority access for ultrafast charging parks. Incentivizing states to provide renewable energy for all high-capacity EV chargers and classifying green loans, especially for EVs, under Priority Sector Lending (PSL) are vital steps. These initiatives would ensure robust charging infrastructure, promote EV adoption, and attract investments into the green mobility space.
Establish a Unified Carbon Market
Introducing a vibrant carbon market with clear regulatory frameworks will provide clarity on carbon pricing and make decarbonisation projects more attractive while reducing intensity of emissions from hard to abate sectors. By leveraging Article 6 of the Paris Agreement, India can position itself as a global hub for carbon credit generation, attracting significant FDI and accelerating industrial decarbonisation.
India stands out in climate action, having surpassed its Nationally Determined Contributions (NDCs) ahead of schedule. As of December 2023, the emissions intensity of GDP reduced by 33-35% from 2005 levels and achieved 40% cumulative electric power installed capacity from non-fossil fuel sources. By adopting global best practices, India can accelerate its journey to achieve its net zero goals by 2070.