The Union Budget 2016-17 came with a reassuring tone, with the government opting for fiscal discipline and sticking to its fiscal deficit target. The net government borrowing target for the next fiscal was also significantly below expectations, lending a note of optimism. Another notable feature of this year’s Budget was the significant increase in outlay for rural roads and infrastructure which augurs well for the economy at large.
The Budget kept up the momentum required for growth and development of LED lighting industry. The government plans to change 77 crore conventional bulbs and 3.5 crore conventional streetlights with LEDs, which would save Rs45,500 crore by reducing 21,500 MW electricity demand, as revealed in the Economic Survey 2015-16. Further, the Survey states that the National LED Programme will result in annual electricity saving of about 109 billion units and a 21,500 MW reduction in demand, along with monetary savings of Rs45,500 crore accruing to domestic consumers and urban local bodies.
Already the government is implementing initiatives for the LED lighting sector, which aims at replacing incandescent bulbs with LED bulbs under schemes such as Domestic Efficient Lighting Programme (DELP). Due to this initiative, called Unnat Jyoti by Affordable LEDs for All (UJALA), demand for LED has seen a major upswing. Thanks to the push being provided by the government, declining prices of LED lights is becoming a key factor in driving our industry’s growth.
Keeping up with this trend, Union Budget had a lot to offer for the lighting industry. To begin with, the Indian Railways’ decision that all new light provisions will be LED luminaire only, and all railway stations will be covered with LED luminaire in the next two-three years, is expected to be a major growth driver for the industry. All 400 stations being planned to be developed with private participation are likely to be announced as ‘green stations’ with several environment-friendly measures like generation of solar energy, recycling of water, conversion of waste to energy and use of LED lights incorporated in the plan. The move will help Railways in reducing energy consumption in non-traction areas by 10% to 15% through installation of energy-efficient LED lights.
The National LED Programme will also facilitate India’s commitment towards reducing its emission intensity per unit of GDP by 33-35% by 2030 under its Intended Nationally Determined Contribution (INDC). To meet the demand, the programme is expected to encourage and support domestic manufacturing of LED bulbs, making it consistent with ‘Make in India’ policy of the government.
Taking note of the same, in the Budget the government has also undertaken measures to promote ‘Make in India’ by incentivising domestic value addition – an important pillar in this year’s Budget. Changes have been proposed in customs and excise duty rates on certain inputs, raw materials, intermediaries and components and certain other goods with plans to simplify procedures to reduce costs and improve competitiveness of domestic industry which is a welcome move.
While emphasis on energy efficiency has been a primary focus of the current government, the power sector also saw some timely assurances. The doubling of coal cess from Rs200 per ton to Rs400 per ton is a welcome move as it seeks to penalise power generation through polluting sources and incentivise green energy. Similarly, plans to achieve 100% electrification of all villages by March 2018 infuses confidence in the government’s ability to deliver on its commitments ahead of schedule, and indeed reassure the public at large particularly residing in rural areas of cleaner and adequate power supply for lighting purposes.
On the other hand, certain industry demands were given a skip. The Budget did not agree to the demand to remove or cut the minimum alternate tax (MAT) which will impact growth of special economic zones (SEZs). The industry had demanded removal or reduction in the 18.5% minimum alternate tax on SEZ units. Though extension of income tax benefit for SEZ units till 2020 is a positive move, imposition of MAT on new SEZ units will not allow the full impact of the benefit. There is already a slowdown in SEZ sector, and there is an urgent need to withdraw MAT to provide support to the sector.
The author is chairman & managing director of EON Electric. Views expressed are personal.