India needs to add massive amount of solar and wind power capacity this year to meet its first target

• The government of India has set a massive target of achieving 175 GW in renewable energy capacity by 2022.
• With just one year to go to meet the first target, India’s renewable industry will have all eyes on Finance Minister Nirmala Sitharaman on February 1.
• From the Budget 2021, the industry has pinned its hopes on regulatory changes that will boost the sector, including a single window of approval, custom duty taxes, no restrictions around net metering and more.

The government of India has set a massive target of achieving 175 GW in renewable energy capacity by 2022. Prime Minister Narendra Modi has further increased the target to 450 GW renewable energy capacity by 2030.

With just one year to go to meet the first target, India’s renewable industry will have all eyes on Finance Minister Nirmala Sitharaman on February 1, as she presents the Union Budget with the hope of measures that will help the country achieve the target.

India’s current renewable energy capacity

According to a report by the International Energy Agency, India is expected to be the largest contributor to the renewables upswing in 2021, with the country’s annual additions almost doubling from 2020. “A large number of auctioned wind and solar PV projects are expected to become operational following delays due not only to Covid-19 but also to contract negotiations and land acquisition challenges,” said the report.

But that will need a lot of effort, because now in one year, the sectors have massive targets to meet.


Energy and power are crucial sectors within the Budget, in which renewable energy will be in focus. According to Indiaspend, if the sector continues to grow at its current pace it will create 190,000 jobs by 2022-23.

The growth in renewable energy also has business interests for top business conglomerates including Adani Green, Tata Power among others.

Source: saurenergy.com

From the Budget 2021, the industry has pinned its hopes on regulatory changes that will boost the sector, including a single window of approval, custom duty taxes, no restrictions around net metering and more.

Withdraw restrictions on net metering

To boost the adoption of solar energy across the country, the industry expects the government to withdraw the restrictions on net metering. Net metering is basically a system where credit is offered to residential and businesses, which are creating excess electricity with their solar panels and sending it back to the grid. The Indian government has proposed that there will be a withdrawal of Net Metering over 10 KW load for any consumer.

This would further boost the rooftop solar installations, which currently stand at just 4.6GW.

Custom duty in solar

During Budget 2020, the government had proposed a 20% import duty on solar cells and panels but it hasn’t yet come into effect. The government had again hinted on imposing basic customs duty on solar equipment to boost the Atmanirbhar initiative and reduce the dependency on imports from China.

"The proposal, which has been cleared post discussions with PMO, is to levy 10 percent basic customs duty on solar modules and 20 percent on solar inverters from October 2020, which will then be hiked to 40 percent on solar modules and 25 percent on solar cells from July 30, 2021," said reports.

“We are expecting clarity around the duty structure on both cells and modules and the duration of the duty. It will fast-track investments in the sector,” Sameer Gupta, chairman and managing director of Noida-based Jakson Group told ET.

According to TERI, domestic manufacturing of solar equipment in India could generate ₹2.94 lakh crore by 2030.

However, certain sections of the industry also believe that the custom duty should be held back as imposing it now will delay the government’s targets. The solar industry in itself has a target of 100 GW production by December, 2022.

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