ENERGY SECTOR

Industry Size: Primary Energy Consumption: 700 million tonnes oil equivalent (source: BP Statistical Review)

Employment Figure: There are no consolidated numbers; it's highly segmented sector

Contribution to GDP: Contribution of Power & Utilities in GDP is 2.4%

KEY ISSUES

Withgenerationcapacitycrossing300Gw mark, serious supply shortages are now history. India must initiate the next stage of power market reforms by liberalising open access, enhancing cross-border connectivity, strengthening ancillary services, and main-streaming renewable energy supply.

Theimprovedsupplypositionalsooffers an opportunity to expand rural electricity access, shut aged plants, and extend electricity use significantly into transport, both public and personal. The conditions are ideal now for the critical next phase of power market reforms and capital asset growth. How can Budget 2017 drive this reform and growth?

Industry ask

The government has set a clear policy direction towards greener energy mix. In order to maintain capacity addition, the industry expects the government to maintain some of the incentives to compensate against global uncertainty and challenges arising from GST implementation.

The domestic manufacturing sectors suffer a cost disadvantage due to tax structure and inadequate incentives. The governments in Germany earlier and China more recently offered comprehensive state support to develop local manufacturing, before the economies of scale and cluster benefits took over. India must draft a strong policy package to grow domestic manufacturing for power sector needs.