The government announced removal of 20% import duty on solar cells and panels in the Budget, with immediate effect. According to the Budget documents, the customs duty on solar cells and solar cells assembled in modules or made up into panels was reduced from 20% to zero per cent. This assumes significance in view of India’s ambitious target of adding 100 gigawatt (GW) of solar energy by 2022. India has already achieved installation of 34 GW of solar energy in the country.
The provisions in Budget 2020 received a positive response from the power sector with the industry largely applauding the big push for renewables and rural economy through solar power and the emphasis on smart metering to ease out discom woes.
Industry players gave a positive response to the announcements on lower corporate tax for new energy companies, extension for PM Kusum scheme, allowing farmers to utilise their barren land for renewable energy generation, the proposal for setting up large solar power capacity along railway tracks and the focus on ensuring smart prepaid metering over the next 3 years.
According to rating agency ICRA the measures to boost decentralised solar generation, including through solar pumps, is likely to lower subsidy dependence for discoms and also provide demand boost to solar equipment and energy efficient pump manufacturers.
The Union government’s push for clean energy may put the state power utility, Tangedco, in trouble as it may have to decommission a clutch of its thermalunits with an installed capacity of 1,850 MW, which is nearly 50% of the total installed capacity of thermal power units in the state. The total installed capacity of thermal units in the state is 4,320 MW. In the Budget 2020 FM said that old thermal power plants with high carbon emission levels must be decommissioned.
Economists at Crisil, saying planned budgetary measures are not expected to provide a short-term boost. Noting that the economy is facing its worst slowdown in over a decade, a Crisil report has said this was because consumption and investment have stopped firing for too long.
Shishir Baijal, chairman of Knight Frank, said the real issue is how to spur demand in housing. “With exemptions gone (under the new tax regime), there is no incentive to buy homes. Generating demand will be a big issue,” he said.
India’s coal import increased by 7.6% to 185.88 million tonnes (MT) in the April-December period of the current fiscal .Coal imports in December rose by 13.3% to 20.52 MT compared to 18.10 MT in the year-ago month, according to provisional data by mjunction services.