From energy transition pathways to a roadmap for decarbonising hard-to-abate industries, and involving private players in expanding nuclear energy capacity, to conducting energy audits of MSME clusters, the Budget for FY25 reinforces the government’s commitment to “energy security” by creating a robust circular economy and a low-carbon-oriented manufacturing hub.
Besides, it also reinforces the commitment on de-bottlenecking the minerals value chain — a key to clean energy transition —through ‘critical mineral mission’ for domestic production, recycling and overseas acquisition. Rationalising customs duty on copper, lithium, cobalt and rare earth elements will boost manufacturing of EVs and battery energy storage systems (BESS).
Energy security
Energy security is among the government’s nine priorities in the Budget and a key component in its pursuit of a ‘Viksit Bharat’.
“We will bring out a policy document on appropriate energy transition pathways that balances imperatives of employment, growth and environmental sustainability,” Finance Minister Nirmala Sitharaman said on Tuesday.
The Minister also announced that a roadmap for moving the ‘hard-to-abate’ industries from ‘energy efficiency’ targets to ‘emission targets’ will be formulated. Besides, an investment-grade energy audit of traditional micro and small industries in 60 clusters, including brass and ceramic, will be facilitated. Financial support will be provided for shifting them to cleaner forms of energy.
Arindam Ghosh, Partner (Power Sector Advisory) at Nangia Andersen, said that to support energy transition, government has proposed to expand the list of exempt capital goods for use in solar cells and panel manufacturing. Further, in view of sufficient domestic manufacturing capacity of solar gas, glass and thinned copper interconnect, it has proposed not to extend the exemption of custom duties.
Policy for promoting pumped storage projects (PSP) will be brought out for electricity storage and facilitating smooth integration of the growing share of renewable energy, she added.
Going nuclear
The Finance Minister emphasised that nuclear energy is expected to form a “very significant” part of energy mix for Viksit Bharat and the government will partner with private sector for setting up Bharat Small Reactors and R&D of Bharat Small Modular Reactor.
On the proposal of developing indigenous technology for Advanced Ultra Super Critical (AUSC) thermal power plants, Anujesh Dwivedi, Partner, at Deloitte India, said offsetting the incremental cost of advanced metallurgy required for AUSC plants through budgetary support will help bridge the cost difference with super-critical or advanced supercritical plants. Transitioning to AUSC for the proposed new thermal generating stations will be beneficial in reducing their carbon footprint by about 10 per cent.
“The steps towards development of taxonomy for climate finance will support achievement of the country’s climate commitments and green transition, presenting an opportunity in the growing need of ESG compliances,” PHDCCI Executive Director Ranjeet Mehta said.
Hits and misses
On the PM Surya Ghar Muft Bijli Yojana (Prime Minister’s Rooftop Solar: Free Electricity Scheme), Sitharaman said that the scheme has generated more than 1.28 crore registrations and 14 lakh applications.
However, there were some misses in the budget. KPMG Global Head of Energy, Natural Resources and Chemicals, (ENRC) Anish De said there were expectations of policy and budgetary support for building out the power transmission infrastructure at an accelerated pace to evacuate clean power.
There were also expectations of incentives and rationalisation of taxes and duties to encourage domestic hydrocarbons and biofuels production and reduce dependence on imports. Union Budget has not touched these important issues, and that would disappoint sections of the industry, he added.