RE sector reacts to Budget 2023


Highlights on green energy in Union Budget 2023 – 24*


The finance minister said that the Budget 2023 - 24 builds on a focus on *green growth*. India is moving swiftly in reaching its Net-Zero targets by 2070.

  • The National Green Hydrogen Mission will facilitate the transition of the economy to low carbon intensity and reduced dependence on fossil fuel imports. It has an allocation of ₹19,700 crore, will facilitate the transition of the economy into a low-carbon intensity and green economy.
  • Target for the hydrogen mission is to reach annual production of 5 MMT by 2030.
  • ₹ 35,000 crore allocated for priority investment towards energy transition, net-zero objective.
  • Battery energy storage systems with a capacity of 4,000 MWh will be supported with viability gap funding.
  • Framework for pump storage projects announced.
  • Inter-state transmission system for evacuation, grid integration of 13 GW of renewable energy from Ladakh to be constructed with investment of ₹20,700 crore.


Concerns need addressal, mere allocations will not suffice
Sapna Gopal and Binit Das

In Budget 2023, a sum of Rs 10,222 crore has been allocated towards the Renewable Energy sector and the outlay is an increase of 48% over last year’s allocation of Rs 6,900.68 crore (budget estimate). Also, this year’s Budget allocated Rs 5,331.5 crore for the solar power sector, including grid and off-grid projects. This was a 53.65% increase compared to the previous Budget’s Rs 3,365 crore and a 104.58% (increase/decrease) over FY21’s Rs 2,606 crore allocation. Furthermore, a sum of Rs 1996.46 crore was allocated for solar energy under the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) scheme, launched in 2019. The National Institute of Solar Energy has received Rs 54 crore in the Budget, up by Rs 9 crore from last year's Rs 45 crore. Wind and other renewable energy sectors have received Rs 1,245 crore compared to previous year’s Rs 1,102 crore.

So far, so good. However, that does not really change the scenario for the solar sector that continues to languish owing to a number of issues----Even now, the rooftop solar is plagued with problems and has been successful only in the states of Gujarat and Madhya Pradesh. In most other states, developers are struggling with distribution companies (Discoms), who they lament, refuse to cooperate, when it comes to implementing solar rooftop. The utility scale solar projects is languishing as well---owing to high basic customs duty, the cost of imported cells and modules going through the roof, approvals and clearances of large-scale projects, the insistence that developers must adhere to the ALMM list of PV and a need of ALMM on Solar Inverters. This has slowed down the sector considerably and experts believe things may get worse if measures are not taken now.

In the wind energy sector, the issues of repowering persist and they need addressal too. A beginning has been made for offshore wind energy, but it has been taking a long time to actually get implemented.
Even though India's annual Budget announcements witnessed allocations for the wind and solar sector, the buzz seems to be more around green hydrogen, energy storage, large hydro and the bio energy sector. Queer, considering that expectations from the solar and wind sector, in terms of the sheer numbers is much higher compared to the other sectors. Of the 500 GW of renewable energy that India aims to be achieved by the year 2030, 280 GW is expected from solar power and 140 GW from wind power. Even in the earlier target of 175GW by 2022, 100GW was to be achieved by the solar sector and 60GW from wind. India did not meet its earlier target and from that, it needs to learn lessons---the need to address pressing issues that concern the sunrise sector and the wind energy sector.

What policy makers also need to realise that to achieve the goals of net zero and decarbonisation, mere allocation of funds does not make sense when the actual problems of two of its main sector---solar and wind, are addressed. Till the issues are sorted, targets will not be achieved and the allocations may prove futile.  


Budget bets big on Compressed Biogas (CBG)
Rahul Jain

The Budget announced on February 1, 2023, rolled out ₹35,000 crores to move towards energy transition and energy security. The Galvanizing Organic Bio-Agro Resources Dhan (GOBARdhan) scheme will help install 500 new waste to wealth bio-CNG plants to promote the circular economy. This will consist of 200 compressed biogas (CBG) plants, 75 of which will be located in urban areas, and 300 community or cluster-based plants, with a total investment of 10,000 crores. “In due course, a 5% compressed biogas (CBG) mandate will be introduced for all organizations marketing natural gas”, said Nirmala Sitharaman, Union Minister of Finance of India.

“To avoid cascading taxes on blended compressed natural gas, I propose to exempt excise duty on GST-paid compressed biogas contained in it”, she added.

The Budget also focused on providing an impetus to digestate or bio-manure which is an important by-product of the Bio-CNG plant. As per the budget, necessary financial support will be provided for the distribution of bio-manure. About 1 crore farmers will be facilitated to adopt organic farming over the next three years and 10,000 Bio-Input Resource Centres will be established for this purpose.


Ankit Mittal
Co-founder and CEO of Sheru

"For clean energy and e-mobility, Budget 2023 has several benefits that carry forward the momentum. Electric vehicles need further cost declines in battery and electronics to increase consumer uptake. The custom duty reduction on the import of capital goods and machinery for li-ion battery manufacturing and subsidy on the import of lithium-ion cells being extended by another year will ensure that this cost decline continues.

While clean energy has been rising rapidly in recent years, lack of storage and outdated transmission infrastructure has been slowing its growth. The budget addresses these through a large CAPEX allocation for modernising and strengthening the green power infrastructure. In addition to this, there is also viability gap funding for battery storage and 35,000 crores allocated towards green energy transition.

India’s mobility and energy sectors are witnessing rapid transformations and moving towards a zero-carbon future. Budget ’23 has provided a boost to aid that" Mittal added.


Gautam Mohanka
Managing Director, Gautam Solar

"To reach our goal of net zero carbon emission by 2070, Green Growth has been made one of the 7 priorities of this year’s budget. The government is implementing various programs for green growth which will help reduce carbon intensity and create green jobs. The ₹35000 crores capital investment for achieving energy transition and net zero objective and energy security by the Ministry of petroleum and natural gas will help the country’s goal of decreasing the share of fossil fuels and increasing the share of renewable energy. The Finance Minister highlighted the National Green Hydrogen Mission with outlay of 19000 crore to help achieve annual production target of 5 MMT by 2030 for facilitating the net-zero target. The government highlighted the Green credit Program under the Environment (Protection) Act to incentivize sustainable actions which is a net positive for the renewable energy industry. Promotion of Battery energy storage systems by Viability Gap funding of capacity 4000 MWh and extending exemption on machinery for production of Li-Ion battery manufacturing will further increase India’s domestic production capacity."  


Anand Srinivasan
Managing Director, Covestro

"Budget 2023 has taken a significant step towards green growth with its focus on green hydrogen, clean energy storage and transmission. This is a welcome move that will help India transition to a low-carbon economy and reduce its carbon footprint. We at Covestro India, are committed to supporting the Government in its efforts to promote green growth and are looking forward to working collaboratively with all stakeholders to develop innovative solutions for a sustainable future."


Rishabh Jain
Senior Programme Lead, Council on Energy, Environment and Water

“The Viability Gap Funding (VGF) support for the 4 GWh battery energy storage system announced in the Union Budget and greater thrust on pumped hydro are critical to help India move towards meeting the Energy Storage Obligation targets. The VGF support should however be leveraged to increase our understanding of the technology and application and should not be considered as a continuous tool for support. Further, the exemption of customs duty for capital goods and machinery for lithium-ion battery manufacturing will reduce the final prices of batteries and make electric vehicles more affordable for consumers. CEEW Analysis suggests that the key equipments for battery cell manufacturing are imported and their share is between 65-75 per cent of the overall infrastructure costs. Going forward, the government must aim to acquire critical minerals from overseas and build the capability to process them.”


Tanya Singhal
Founder SolarArise

“A solar power producer with about half a GW portfolio across India. My assets have recently been listed as a part of a trust on the London Stock Exchange. So glad to see the allocation of 4000 MWh worth VGF for Battery Storage Solar Solutions (BESS) in the 2023 budget. This is a critical need of the day to make solar a 24 hr reality and make Indian truly atma-nirbhar & self-reliant in its energy needs by ensuring supply of clean power in the peak hours and reducing dependence on fossil fuel imports. The Rs 35 crore for energy transition and net-zero carbon emission target coupled with the Green credit program for responsive actions by individuals and companies will encourage environment-friendly behavior and help accelerate the journey of building emission-free lifestyles, and thus a green planet. With this and the 7 main priorities, "Saptrishi," India will be a forefront leader to drive sustainable growth and tackle the global climate crisis head-on.”


Trideep Bhattacharya
CIO-Equities, Edelweiss MF

"The budget has a strong focus on the green evolution of India, including a Green Hydrogen Mission with a program outlay of ₹197bn to support the energy transition, and an allocation of Rs 350bn for priority capital expenditure towards energy transition and achieving net zero by the Ministry of Petroleum & Natural Gas."


Bikesh OgraMD & CEO, Jakson Green

The Union Budget 2023 with an outlay of ₹35,000 crore for green energy transition, in addition to the recently announced Green Hydrogen mission with an outlay of ₹19,500 crore, has reiterated the government's commitment to achieve net zero targets alongside making India an important hub for renewable manufacturing. Encouraging the Net Zero goal the government has firmly put clean energy transition at the centre of India's economic growth. A firm step towards green missions of government will give impetus to job creation, research n development as well as export opportunities while contributing to net-zero objectives. These initiatives are likely to boost domestic manufacturing and reduce import dependence for the renewable sector. The Union Budget 2023 clearly indicates, India is ready to establish itself in the leadership position on the global green energy transition.