Today, India’s geopolitical stability, availability of manpower & ability for scale, positions it uniquely to attract investments, expand its manufacturing base – for local demand as well as for exports – and thus fill the gaps in the global supply chains. This will have to be done strategically, in anticipation of the changing parameters of export markets; the recent Carbon Border Adjustment Mechanism by the European Commission being one example.
To improve the quality of life for the soon to be largest population in the world, India has been taking a multipronged approach to economic growth. Strategic initiatives weaving together the real and virtual worlds are forming the foundation of this growth – from Gatishakti that integrates the infrastructure of today to National Education and Training policies that shape the world of tomorrow.
Focusing government spending, taxation and transfer payments to advance sustainable value chains and future technologies that leverage this foundation is critical follow through.
In the capital goods sector, for example, Centres of Excellences initiated under the Scheme for Enhancement of Competitiveness by the Ministry of Heavy Industry have shown promise and continued investments and incentives for quality R&D will feed into the next step – formation of a world class manufacturing base.
The drive to being self-reliant created a large swathe of industries whose mettle were tested during the pandemic. But as the world raises walls to protect their carbon footprint, Indian exporters will see direct links between international competitiveness and the extent of decarbonization of their products, operations and supply chain, and their power sources.
Hence, strategic targeted allocation to help them step up their offering and to produce to international standards, while incentivizing embedding of technologies to reduce their climate footprint is essential to crowd in future investments. This will also help create a larger quantum of future-ready jobs and percolate benefits to a wider population.
A sustainable energy future
India’s coal consumption has doubled since 2007 at an annual growth rate of 6% and the International Energy Agency estimates that the largest increase in the fuel’s demand globally this year was from India. The IEA expects India’s coal demand to rise steadily to 1,220 million tonnes in 2025, with 92% of this going into electricity generation.
As electricity becomes the backbone of the future energy system, it becomes imperative for the nation to switch to greener generation. The commitment of half of generation capacity from renewable sources will be a valuable step when implemented in time and supported by adequate, reliable and flexible infrastructure to transmit this electricity.
BofA pegs the investment in renewable energy in India at about $10 billion for 2023. To add the projected 228.54GW of capacity by FY27, the Indian power sector will have to employ around 1.67 lakh professionals, with technical manpower accounting for the lion’s share. And the recently announced ‘Transmission system for integration of over 500GW of RE capacity by 2030’ by CEA estimates Rs 2.4 lakh crore investments.
Innovation, and the localization of technologies and solutions will be crucial for such investments in green networks to be effective. For the above investments to have multiplier effects, the ambit of Production Linked Incentive Schemes must be cast wider. We are witnessing the growing advantages afforded by PLIs announced a year ago to the solar panel, electronics and battery industries. HVDC valves, subsea cables, offshore transmission equipment, etc. are the natural next segments for development through PLI focus.
The digital power matrix
The advent of 5G networks and the convergence of ITxOT, provide expansive opportunities for collaboration, co-creation, and commutation across the matrix of academia, industries, states, and governments. Last year’s budget focused on leveraging digital in the fields of payments, farming, education, and health. Already, digital is closing the last mile gap in finance – the country recorded over 88.4 billion digital payment transactions in 2021-22. It also streamlines resources under projects like Atal Mission for Rejuvenation and Urban Transformation, and Digital Agriculture Mission 2021–2025.
Building digital infrastructure, resilient supply chains, supporting digital skills, and addressing cybersecurity issues will catalyze the nation’s growth prospects. In electricity, judicious financial prioritization in FY24 can help tap into the full potential of the Smart Meter National Program launched in 2021, while 5G-enabled smart grid solutions can reduce transmission and distribution losses, peak load management reducing emissions by improving efficiencies.
Multi-levered and networked incentives, with realistic goals and clear execution accountability in linchpin climate resilient segments, can propel India towards the environment, and economic and social leadership on the global platform. And this Union Budget could be a key instrument for taking the country to the next level of growth while balancing energy transition and economic progress.
The writer is MD & CEO of Hitachi Energy India.