JP Chalasani, Chief Executive Officer, Suzlon Group, shares his expectations from the upcoming budget with Rachita Prasad, Editor, Energy and Infrastructure, Moneycontrol.
In India, our wind sites are deteriorating in terms of the ability to generate energy as good (wind) sites have been used up. So, we need products that work well in lower wind sites. It's not that we are not investing, but incentives for research & development (R&D) will help us spend more and leapfrog into various things, including offshore wind.
With larger wind turbine models being introduced frequently, we need to incentivise Indian original equipment manufacturers (OEMs) to invest in R&D and technology advancement, rather than rely on foreign technology.
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Our first recommendation would be that the government should consider announcing a technology grant and PLI (performance-linked incentive) for Indian OEMs with in-house R&D to increase localisation in the on-shore wind energy space to 85 percent, and target newer and more advanced technologies. This could include a PLI of Rs 10,000 crore for advanced onshore wind turbine technology.
New products take time to increase their local content. To speed up localisation so that these products have at least 85 percent local content in two years, the PLI should be applicable to all segments of onshore wind turbine generators (WTGs).
Offshore wind energy is in its nascent stages in India. In order to foster localisation in this space, our second recommendation is that the government should formulate a PLI scheme for advanced turbine technology and supporting ecosystems, with an outlay of Rs 20,000 crore for Indian OEMs with in-house R&D.
In view of geopolitical issues as well as the rising demand for wind energy equipment across the globe, India has the potential to emerge as the preferred supply chain partner for the world due to our mature and thriving manufacturing ecosystem, coupled with a stable economy. But we require support to develop exports and create a global hub for wind energy equipment manufacturing.
We need the right export policies and interventions to create a high-potential export market. Such export incentives should be given to companies in proportion to equipment or components supplied in the domestic market.
The industry needs to be encouraged to invest in capex for wind turbine component manufacturing and start indigenous production of components that are outsourced at present. Suitable import duty concessions for production machinery, etc., needs to be provided to encourage domestic manufacturing, and to upgrade the facilities for manufacturing newer wind turbine components.
The government should look at incentivising the micro, small, and medium enterprises (MSME) sector by providing interest subvention to reduce the cost of funding. An extension of the deadline under section 115 BAB of the Income Tax Act by another three years from (from 31/03/2024), would help domestic manufacturers. (Under section 115 BAB, newly-founded domestic manufacturing firms are subject to a reduced tax rate of only 15 percent. This expired on March 31, 2024.)
There is also a need for incentives to be extended to wind energy operations and maintenance service (OMS) providers. To meet India’s target of being net-zero by 2070, it is not sufficient to have installed renewable energy (RE) capacity. The real impact will come from consistent and optimised renewable energy generation over the lifecycle of the assets.
Some other recommendations in this context are:
Wind energy assets are fairly decentralised and spread over large expanses of land in very remote areas, compared to thermal or solar farms which are fairly concentrated. Hence, it is difficult to find the right ecosystem or talent to carry out 24x7 maintenance and operations to keep these assets in top generating form.
Today, most global OEMs do not offer long-term OMS due to these challenges, which also puts margins under great pressure. It is therefore critical to incentivise quality OMS providers, who take on lifetime OMS for wind farms, through income tax rebates.
This will encourage them to continue to invest in quality talent and infrastructure, along with the best technology to ensure optimal performance of India’s wind energy installations.
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