Budget 2024: Indian Solar Industry Seeking Boost For Manufacturing
Here are some key policy and incentives which the sector can expect in the upcoming budget.
The solar energy industry is looking at policy support and incentives such as a boost for domestic manufacturing of solar panels in the upcoming annual budget.
Solar energy is crucial to India's transition from coal-fired thermal power plants to renewables. The country's current solar capacity stands at 85 gigawatts, according to data from the Ministry of New and Renewable Energy. That accounts for 57% of India's grid connected renewable capacity.
The government earlier this year announced measures for the sector such as the Pradhan Mantri Suryodya Yojana, and made allocation for solar projects.
Here are some key policy and incentives which the sector can expect in the upcoming budget.
Pradhan Mantri Suryodaya Yojana
The Pradhan Mantri Suryodaya Yojana was first introduced during the interim budget presented earlier this year. The scheme aims to install rooftop solar systems in one crore Indian households. Benefits of the scheme include up to 300 units of free electricity monthly, potential annual savings of Rs 15,000 to Rs 18,000, and the option to sell surplus electricity to distribution companies.
While the interim budget laid the groundwork for the Pradhan Mantri Suryodaya Yojana, the Union Budget is expected to provide more concrete details and implementation strategies, such as:
Financial Allocations: A clear allocation of funds for the scheme to facilitate its implementation.
Eligibility Criteria: Specific guidelines on who is eligible to benefit from the scheme.
Implementation Mechanism: A detailed plan on how the scheme will be rolled out, including the role of state governments and distribution companies.
Subsidies And Incentives: Potential subsidies or incentives for rooftop solar installations to encourage wider adoption.
Target Achievement: A timeline for achieving the target of one crore rooftop solar installations.
Increased Budget Allocation For Grid-Based Solar Power
The interim budget witnessed a significant allocation boost for grid-based solar power projects to Rs 10,000 crore for the year ending March 2025—more than twice the previous revised estimates of Rs 4,757 crore.
The higher allocation can help boost opportunities in the sector.
Boost In Domestic Manufacturing
The government has laid out initiatives such as the approved list of models and manufacturers which mandates the use of solar panels manufactured by those players that are part of the list, for government solar projects.
While India is self-sufficient in solar module production, it lacks solar cell production capabilities. This has led to a rise in solar cell and panel imports.
India imported solar cells and panels worth over Rs 51,460 crore in the FY24, 2.84 times greater than the year ago, according to Commerce Ministry data. The main reason for the rise is landed imported costs of solar panels are lower by 4 cents per watt compared to domestic panels, according to ICRA. Furthermore, solar cell imports attract a 25% basic customs duty.
Adjustments to this duty or expansion of the production-linked incentive schemes for solar cell and panel manufacturing could attract investments and boost domestic production.
What Companies Say
The upcoming budget presents a good opportunity for the government to support domestic solar panel manufacturing, according to Hitesh Doshi, chief managing director of Waaree Energies Ltd., India's largest solar panel manufacturer.
"The industry expects the budget to support more and more end-to-end manufacturing, support all the ancillaries in the sector as well as the products required to make solar panels, batteries, etc.," he told NDTV Profit.
While the government has launched production-linked incentives to help with support in terms of capital and interest rates. India is currently competing with countries whose solar manufacturing capabilities are ahead of India's and thus increased capital support and PLI schemes will help the country compete on a global level, Doshi said. "At present, there are no benefits if India exports solar products, this makes us less competitive."
