Sun, Sep

Was Budget 2018 beneficial for Solar?

Industry Insights


Every year around this time our yearly budget is presented in the parliament. This year there were a lot of expectations to improve the Power sector. Budget is an account of the finances for the fiscal year, every ministry of the central government prepares its own budget and then the budget is assembled and presented as the national budget by the finance ministry. It is presented in both the houses of the parliament and the productive decision takes place. The government has the powers to make amendments in the budget, if necessary.


 What are the different stages through which the budget implementation process goes through?

The entire budget process takes place in four distinct phases: 

Budget formulation: At this level basically, preparation of the estimate of total expenditure is done and receipts are made for the financial year about to occur.

Budget enactment: At this level, the given proposal of the Budget is approved by the Legislature through the ratification by Finance Bill and Appropriation Bill.

Budget execution: At this level, certainly the enforcement of the provisions in the Finance Act and Appropriation Act is conducted by the government; it collects the receipts issued and makes expenditure in various services those are approved by the Legislature.

Legislative review of budget implementation: In this, the audits of government’s financial operations are conducted and managed on the behalf of the Legislature.

Budget is a process, which affects every sector of the market and especially it affects the middle-class society, they had high expectations from the budget 2018-2019, which is yearly proposed by the finance minister of the Country. The finance ministry is scrutinizing raising the personal tax exclusion limits and altering the tax slabs periodically. Last year, the GST implementation had a drastic impact on the various industries.


What were the expectations from the Budget-2018?


The renewable energy industry has some expectations from the Budget which includes extra capital allocation, discounts on taxes and duties and proposal for receiving the timely payment from discoms and has a great support for having start-ups in the solar sector.

  • The previous budgets applied various taxes and duty cuts on various components used to manufacture wind and solar equipment.
  • The biggest expectation was the lower corporate taxes on the renewable energy sector.
  • A duty will affect the demands of the customers by raising the solar cost by around 40%, records of low tariffs, supported by the import of low-cost components imported from China that affects the domestic manufacturing.
  • Another expectation from the budget was to allow “start-ups in the renewable energy sector so that the front runners can bring up ingenious ideas, new technologies and several innovations.”
  • The Timely payment from discoms has been a time-hallowed issue and a segment of the industry begrudged that it was not addressed also in the previous Budget.


What does the Budget-2018 bring up for the solar sector?

But the budget of 2018 was full of surprises; it came and just turned the things completely to the rising side, it was a bright moment for the electric power sector.

The presented imposition of 70 percent safeguard duty on import of solar power equipment is not less than a menace for future of the sunrise industry.

The budget issued a large sum of Rs 3,800 crore for Deendayal Upadhyaya Gram Jyoti Yojana and Rs 4,900 crores for Integrated Power Development Scheme. Also, the government has allocated Rs 16,000 crore to the Sahaj Bijli Har Ghar Yojana to permit last mile connectivity in the way of rural households.

The push towards the electricity access in the sector of rural households under Saubhagya & DUGJY schemes and it is likely to provide a boost in energy demand to a certain limit, apart from doing betterment for the quality of life for rural households.

The budget has also, offered an effective apparatus to purchase the surplus solar energy from solar pumps by the discoms at some reasonable prices.

Was the proposed budget completely in the favor of solar and renewable energy?

The things can never be totally positive, good always come handy with some unacceptable facts, the budget-2018, showed a brighter side to the solar and renewable energy sector.


This is steady with the Indian dream, of utilizing the solar energy and boosting the renewable energy sector. 

Earlier there was around 5% import duty on the various equipment and tools used to create solar cells etc, but the budget-2018 completely removed it and made it zero from earlier announced. By this removal of import duty from solar sector the domestic manufacturers of solar equipment have got a big relief.


The green technology industry has been hoping for the subsidies and some high inducement to be provided to compensate the high costs of solar project development in India. But unfortunately, the green industry lead to a high disappointment, as there were no specific subsidies, incentives, or grants have been made publically issued or granted for Ministry of New and Renewable Energy.

Now, the state governments will implement a proposal where the various companies or licensees will have to purchase the farmers’ surplus solar energy power at the reasonable and money-making rate.

The budget has been in favour by eliminating the 5% customs duty on various tools and equipment such as solar tempered glass that is used for manufacturing the solar power cells, panels and other important components.

By such a favourable budget the manufacturing sector will have a great boom and also the solar panels will become relatively cheaper, then earlier and more households will be able to set up solar.

 The budget has also made a positive attempt by proposing the annual air pollution crisis in the regions of north India to cope up with the loss caused by crop stubble burning incident took place.

Finally, the budget has been proposed, whether it’s in the favour of industries and societies or against their expectations, one has to follow it. Now, the only thing we can do is to keep positive expectations’ from the budget of 2019.

Author: Mr. Amit Thussu, Director, KACO new energy
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