Author: Power Peak Digest Team Pub Date: February 2, 2025
Official extract from finance minister Nirmala Sitharaman’s budget speech
1. Nuclear Energy: Scaling Capacity and Private Partnerships
The Budget prioritizes nuclear energy as a cornerstone of India’s long-term energy transition. Finance Minister Nirmala Sitharaman stated:
“Development of at least 100 GW of nuclear energy by 2047 is essential for our energy transition efforts. For an active partnership with the private sector towards this goal, amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act will be taken up.”
To operationalize this vision, a Nuclear Energy Mission with an outlay of ₹20,000 crore will focus on indigenously developed Small Modular Reactors (SMRs). The government aims to operationalize 5 SMRs by 2033, leveraging private-sector collaboration through legislative reforms.
2. Clean Technology and Renewable Manufacturing
The Budget emphasizes building domestic capacity in renewable technologies. The Finance Minister highlighted:
“The Mission will support Clean Tech manufacturing to improve domestic value addition and build our ecosystem for solar PV cells, EV batteries, motors and controllers, electrolyzers, wind turbines, very high voltage transmission equipment, and grid-scale batteries.”
This initiative aligns with the National Manufacturing Mission, which seeks to position India as a global hub for advanced energy technologies. Specific focus areas include reducing import dependence for solar panels, scaling wind turbine production, and establishing gigafactories for lithium-ion batteries.
3. Power Sector Modernization and Financial Reforms
To address inefficiencies in electricity distribution, the Budget introduces reforms tied to fiscal incentives. The Finance Minister announced:
“We will incentivize electricity distribution reforms and augmentation of intra-state transmission capacity by states. Additional borrowing of 0.5% of GSDP will be allowed to states contingent on these reforms.”
These measures aim to reduce distribution losses, improve grid stability, and ensure 24/7 power supply. States adopting advanced metering infrastructure and smart grid technologies will receive priority funding.
4. Research, Innovation, and Deep Tech Funding
A significant allocation of ₹20,000 crore is earmarked for private sector-led Research, Development, and Innovation (RDI). The Finance Minister stressed:
“This initiative will catalyze breakthroughs in energy storage, green hydrogen, and smart grid technologies.”
Complementing this, a Deep Tech Fund of Funds will support startups working on next-generation solutions such as advanced battery chemistries, AI-driven energy management systems, and modular nuclear reactors.
5. Financing Energy Infrastructure via Asset Monetization
The Asset Monetization Plan 2025–30 aims to generate ₹10 lakh crore by leasing public assets, including transmission networks and renewable energy parks. The Finance Minister noted:
“Regulatory and fiscal measures will be fine-tuned to support the Plan.”
Proceeds will fund new projects such as interstate green energy corridors and EV charging networks, with a focus on public-private partnerships (PPPs).
6. Electric Mobility and Battery Manufacturing
To accelerate EV adoption, the Budget exempts customs duties on critical manufacturing inputs. The Finance Minister specified:
“35 capital goods for EV battery manufacturing and 28 capital goods for mobile phone battery manufacturing will be added to the exemption list.”
This includes machinery for lithium-ion cell production, electrode coating systems, and battery assembly lines. The goal is to achieve self-reliance in battery production by 2030.
7. Industry 4.0 and Energy Efficiency
The Budget links industrial modernization with energy efficiency. The Finance Minister emphasized:
“Our Government will support the domestic electronic equipment industry to leverage Industry 4.0 opportunities.”
This includes subsidies for industries adopting IoT-enabled energy monitoring systems, AI-driven demand forecasting, and automation to reduce energy waste.
8. Jal Jeevan Mission: Water-Energy Synergy
The extension of the Jal Jeevan Mission until 2028 includes energy-efficient water infrastructure. The Finance Minister stated:
“The Mission’s focus will be on the quality of infrastructure and O&M of rural piped water supply schemes through ‘Jan Bhagidhari’.”
Solar-powered water pumps and decentralized treatment plants will reduce energy consumption in rural water distribution.
9. Tax and Customs Measures for Energy Security
Critical mineral imports for energy technologies receive duty relief. The Finance Minister declared:
“Cobalt powder, lithium-ion battery scrap, and 12 critical minerals will be fully exempt from customs duty to secure raw material supply chains.”
Additionally, customs duties on solar PV components like open cells were reduced to 5% to lower production costs for domestic manufacturers.
Summary of Energy-Related Initiatives:
Nuclear Energy Mission: 100 GW by 2047, with Rs 200 billion for Small Modular Reactors (SMRs).
Power Sector Reforms: Incentivizing electricity distribution and intra-state transmission capacity.
Clean Tech Manufacturing: Focus on solar PV cells, EV batteries, wind turbines, and grid-scale batteries.
Research & Innovation: Rs 200 billion for private sector-driven RDI in energy technologies.
Asset Monetization: Rs 10 trillion for new energy infrastructure projects.
Energy Efficiency: Support for energy-efficient manufacturing and water management.
Tax Exemptions: Boost for lithium-ion battery manufacturing.