IESA lauds Budget 2023-24 as forward-looking and growth-oriented

India Energy Storage Alliance (IESA), India's leading clean energy technology industry alliance, has welcomed the Union government's latest budgetary announcements as progressive and pro-active measures towards making India a global hub for manufacturing and R&D in clean energy and technology sectors. 

The industry alliance, with over 180 + companies from the domestic battery, e-mobility, and hydrogen industries as its members, has thanked the Union Finance Minister Nirmala Sitharaman for considering some of its pre-budget recommendations that it had represented to the ministry early last month.

Commenting on the budget, Dr. Rahul Walawalkar, President – IESA, said, "The Union Budget 2023-24 is a forward-looking and growth oriented budget that has addressed many of the suggestions provided by the clean energy industry. I am confident that this will give a boost to domestic manufacturing of advanced energy storage technologies with the relaxation of customs duty for manufacturing equipment, aid in demand creation through VGF for BESS, and support for green hydrogen to support almost 50 percent Green Hydrogen demand by 2030".

The budget's announcement on deploying Battery Energy Storage Systems (BESS) with capacity of 4,000 MWh supported by Viability Gap Funding (VGF) across the country can be considered as a major breakthrough for the energy storage sector in India. Although ESS projects as much as 5 GWh are tendered and more than 29 GWh already announced, many states were hoping for support from the Union government for their implementation.

IESA believes that latest announcement for 4 GWh capacity would provide much needed respite for quicker deployment of these projects, while also making them viable for states. The alliance has been advocating for over about 5 years to the Union government for extending VGF support to energy storage projects including the existing renewable projects, upcoming renewable-cum-storage, and standalone ESS projects. On the budget's mention of Pumped Storage Projects, IESA requests the government to consider all factors while developing the framework, so as to make a positive growth on the sector.

Yet another breakthrough announcement from the Union Budget 2023-24 is the exemption of customs duty on the import of capital goods and machinery required for manufacture of lithium-ion cells for batteries used in electric vehicles. Thanking the finance minister for acknowledging one of IESA's key recommendations, the alliance has said that this will go a long way in making 'Made-in-India' batteries competitive than imported ones.

"On the lines of the basic customs duty (BCD) exemption for mobile handsets, we requested the ministry to consider extending similar exemptions on the lithium-ion cell used in the manufacture of battery or packs meant for EV and storage applications. Since a majority of the raw materials and machinery for ACC manufacturing are imported, the previously existing duty structures and taxation on raw materials turned out to be a huge burden for the players. We are elated that the duty structures for capital goods and manufacturing equipment are being done away with for the next one year", said Dr. Walawalkar.

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IESA has also recommended to extend financial outlay for manufacturing of electrolyzers, equipment and other critical components in hydrogen production processes and related supply chain to support the recently announced National Green Hydrogen Mission. The mission has been allocated with ₹ 19,700 crore in the latest budget, with a target to achieve an annual production of 5 MMT by 2030.

Further, IESA's President commended the Union government's vision towards net zero and targeted efforts in the greener direction. The budget has reserved ₹ 35,000 crores for priority capital investments towards energy transition and net zero objectives, along with measures to ensure energy security. "IESA also hopes that the funds meant for scrapping of old vehicles and ambulances owned by government agencies will be used for furthering electric mobility", he said.

Making note of the Union budget's impetus on skill development, Dr. Walawalkar added, "As India makes efforts to grow its focus sectors and create new capabilities in mobility ACC battery manufacturing and other emerging sectors, a skilled and efficient workforce is a pre-requisite to achieve this vision".

IESA's flagship initiative 'IESA academy' has already been trying to address this skill gap in the clean energy technology sectors. The alliance is hoping that the Union government's Pradhan Mantri Vishwakarma Kaushal Samman (PM-VIKAS) and 'Mission Karmayogi' will focus on these critical key areas of skill development as a prerequisite to the country's energy transition.