Budget 2018-19 for Solar and Renewable Energy Sector


The much-anticipated Union Budget 2018-19 was tabled in Lok Sabha by Finance Minister Arun Jaitley on 1st February 2018. However the budget is lacking any great incentives or schemes for renewable energy sector. Due to the prevalent uncertainties, increasing costs of project development in the country and external competition, the industry was hopeful for a few subsidies and incentives.

The government has proposed to eliminate the import duty on components that make up solar panels. The government has proposed that the duty on solar tempered glass or solar tempered [anti-reflective coated] glass for manufacture of solar cells, panels, modules be reduced from 5 per cent to zero. This move gives some relief for domestic solar panel manufacturers that use the glass as an input. This is also positive for solar energy project developers who will seek a pass through of the benefit.

Few provisions made in Budget 2018-19 for Renewable Energy sector:

  • Customs duty on solar tempered glass or solar tempered (anti-reflective coated) glass for manufacture of solar cells /panels/modules reduced to zero percent from the earlier rate of 5 percent.
  • The budget has also allocated ₹2.17 billion (~$34 million) to the state-owned Solar Energy Corporation of India (SECI) under the internal and external budgetary resources (IBER).
  • Income tax for Micro Small and Medium Enterprise (MSME) companies with annual revenues of up to ₹5 billion (~$39.2 million) has been reduced to 25 percent, which is expected to benefit smaller renewable companies.
  • Ministry of New and Renewable Energy (MNRE) has been allocated ₹99 billion (~$1.6 billion) under internal and extra budgetary resources (IEBR).
  • The tariff rate of customs duty for Lithium-ion batteries is being increased from 10% to 20%. The effective rate of import duty on Lithium-ion batteries (other than Lithium-ion batteries for cellular mobile phones) will, however, remain unchanged at 10%.

In his speech, Jaitley also announced that the government will undertake necessary measures to encourage state governments to put in place a mechanism to allow surplus electricity generated by the farmers to be bought by state electricity distribution companies (Discoms) that can help boost India’s emerging green economy. Mint reported on 25 November about the government working on a plan targeted at farmers to generate 20 gigawatts (GW) of solar power. This involves setting up small solar projects of 1-2 megawatt (MW) size on fallow land and solarizing water pumps.

The government is also betting on the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya) to provide the architecture through which it will seek to reduce import of fossil fuels, boost under-utilized power plants and meet its climate change commitments. Prime Minister Modi launched the Rs16,320 crore scheme last year to provide electricity connections to more than 40 million families in rural and urban areas by December 2018, and help achieve universal electricity access.

Budget 2018 -19 Outlay for major Schemes on Renewable Energy:

S.No Scheme Name 2016-17 2017-18 2017-18 2018-19
(FIGURES IN CRORE) Actuals Estimated Revised Estimated
1 Wind Power – Grid Interactive
Renewable Power
489 400 750 750
2 Solar Power – Grid Interactive Renewable Power 1992 2661 1117 2045
3 Green Energy Corridors –
Grid Interactive Renewable Power
200 500 500 600
4 Solar Power – Off-Grid/Distributed
and Decentralized Renewable Power
549 700 985 849

Hence, the outlay on major schemes related to solar energy has been kept more or less same.