NEW DELHI: Proposals such as creation of a national infrastructure investment fund and doubling of coal cess in the Union Budget have buoyed the renewable energy industry, which believes these steps could help solve financing challenges, thereby boosting clean energy projects.
“…as environmental degradation hurts the poor more than others, we are committed to make our development process as green as possible,” Finance Minister said during his Budget speech.
He emphasised on achieving the 1,75,000-megawatt target set for clean energy installations by 2022. This would comprise 1,00,000 MW of solar power, 60,000 MW of wind power, 10,000 MW of energy from biomass and 5,000 MW from small hydroelectric projects. Currently, India’s clean energy capacity is 33,000 MW.
Jaitley envisioned providing electricity by 2020 to the remaining 20,000 villages that still don’t have access to electricity, including through off–grid solar power.
Although there weren’t any sector-specific sops, industry players do not consider it as a major concern.
“The national investment and infrastructure fund will prove to be a game-changer for the renewable energy sector,” said Vineet Mittal, co-founder and managing director of Welspun Energy. “It is also good to allow foreign investments in alternative investment funds”.
The Budget proposed creation of a national investment and infrastructure fund and finding monies to ensure an annual flow of Rs 20,000 crore into it. The money thus raised can be invested in infrastructure finance companies.
Welspun’s Mittal said increasing coal cess to Rs 200 a tonne from Rs 100 will be helpful for sustaining subsidies to clean energy projects.
The minister proposed a programme for faster adoption and manufacturing of electric vehicles. “I am proposing an initial outlay of Rs 75 crore for this scheme in 2015-16,” he said.
Meanwhile, experts note that unlike rail and roads, tax-free bonds have not been specifically proposed for renewable energy. Given this, any funds to the sector from tax-free debt will now have to come out of the general pool of infrastructure bonds. Also, proposals for the utilisation of funds from the increased coal cess are yet to be spelt out.
“It would have been better to propose specific allocations and measures for renewable energy, especially on availability of low-cost funds for the renewable energy sector,” said Anish De, partner, infrastructure and government services at consultancy firm KPMG.
The Economic Survey 2014-15, released on Friday, said India’s clean energy sector was likely to generate business opportunities of $160 billion in the next five years.