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2 Feb 2026·Source: The Hindu
4 min
EconomyEnvironment & EcologyNEWS

Budget Focuses on Duty Exemptions for Clean Energy Manufacturing

Budget emphasizes customs duty exemptions to boost domestic clean energy manufacturing.

Budget Focuses on Duty Exemptions for Clean Energy Manufacturing

Photo by Sungrow EMEA

Finance Minister Nirmala Sitharaman announced customs duty exemptions to encourage domestic manufacturers of clean-energy components. The basic customs duty on sodium antimonate, used in solar glass manufacturing, has been reduced from 7.5% to zero. Specified capital goods for manufacturing lithium-ion cells for battery energy storage systems are also exempted from duty. The allocation for the Ministry of New and Renewable Energy saw a rise to ₹32,914 crore. The Pradhan Mantri Surya Ghar Muft Bijli Yojana, aiming to electrify one crore households with solar energy by 2026-27, has earmarked ₹22,000 crore for the scheme this year.

Key Facts

1.

Sodium antimonate duty: 7.5% to 0%

2.

MNRE allocation: ₹32,914 crore

3.

Surya Ghar Yojana target: 1 crore households

UPSC Exam Angles

1.

GS Paper III: Economy - Government Budgeting, Infrastructure: Energy

2.

Connects to India's commitment to Sustainable Development Goals (SDGs)

3.

Potential for questions on government schemes, fiscal policy, and international agreements

Visual Insights

Key Budget Allocations for Clean Energy

Highlights key financial allocations in the budget related to clean energy manufacturing and deployment.

Ministry of New and Renewable Energy Allocation
₹32,914 crore

Increased allocation to MNRE signifies government's commitment to renewable energy sector. Important for understanding government priorities.

Pradhan Mantri Surya Ghar Muft Bijli Yojana Allocation
₹22,000 crore

Significant investment in rooftop solar scheme. Shows focus on decentralized renewable energy generation. Impacts energy security and household income.

Target Households under Surya Ghar Yojana
1 crore

Ambitious target for household electrification through solar energy. Directly impacts energy access and reduces carbon footprint.

More Information

Background

The push for clean energy manufacturing in India has historical roots in the nation's commitment to sustainable development. India's energy policy has evolved over decades, initially focusing on conventional sources like coal and gradually shifting towards renewable energy. Early initiatives included the establishment of the Ministry of New and Renewable Energy (MNRE) to promote and coordinate efforts in the renewable energy sector. Over time, India has set ambitious targets for renewable energy capacity addition. The National Solar Mission, launched in 2010, aimed to promote solar power generation. Subsequent policies and schemes have further emphasized the importance of domestic manufacturing to reduce reliance on imports and create jobs. These efforts align with India's commitments under international agreements like the Paris Agreement, which requires countries to reduce their carbon emissions. Several government policies and regulations support the growth of clean energy manufacturing. The Production Linked Incentive (PLI) scheme provides financial incentives to companies that invest in domestic manufacturing of solar modules and other renewable energy components. Customs duty exemptions, as highlighted in the recent budget, are another tool used to encourage domestic production. These measures aim to create a favorable ecosystem for clean energy manufacturing in India.

Latest Developments

Recent years have seen a significant increase in investments in India's renewable energy sector. The government has been actively promoting the adoption of electric vehicles and battery storage systems to reduce dependence on fossil fuels. Initiatives like the FAME India scheme provide subsidies for the purchase of electric vehicles. However, challenges remain in scaling up domestic manufacturing of clean energy components. Issues such as access to technology, availability of raw materials, and competition from foreign manufacturers need to be addressed. The government is working to create a level playing field for domestic manufacturers and attract foreign investment in the sector. The Goods and Services Tax (GST) council has also been deliberating on tax rates applicable to renewable energy equipment. Looking ahead, India is expected to continue its focus on expanding its renewable energy capacity and promoting domestic manufacturing. The target of achieving 500 GW of renewable energy capacity by 2030 requires significant investments and policy support. The Pradhan Mantri Surya Ghar Muft Bijli Yojana, as mentioned in the budget, is a step in this direction. The success of these initiatives will depend on effective implementation and collaboration between the government, industry, and research institutions.

Frequently Asked Questions

1. What are the key facts about the budget's focus on clean energy for UPSC Prelims?

The budget emphasizes customs duty exemptions for domestic clean energy manufacturing. Key facts include the reduction of basic customs duty on sodium antimonate from 7.5% to zero, exemptions on capital goods for lithium-ion battery manufacturing, an allocation of ₹32,914 crore for MNRE, and ₹22,000 crore earmarked for the Surya Ghar Yojana.

Exam Tip

Remember the percentage reduction in sodium antimonate duty and the allocations for MNRE and Surya Ghar Yojana for direct questions.

2. What is the Pradhan Mantri Surya Ghar Muft Bijli Yojana, and what is its target?

The Pradhan Mantri Surya Ghar Muft Bijli Yojana aims to electrify one crore households with solar energy by 2026-27. The scheme has earmarked ₹22,000 crore for this year.

Exam Tip

Note the target year (2026-27) and the number of households (one crore) for potential matching-type questions.

3. Why is the government focusing on customs duty exemptions for clean energy manufacturing?

The government is focusing on customs duty exemptions to encourage domestic manufacturers of clean-energy components, reduce reliance on imports, and promote sustainable energy sources. This aligns with India's commitment to sustainable development and reducing its carbon footprint.

Exam Tip

Understand the rationale behind such policies for better analysis in Mains answers.

4. What is the role of the Ministry of New and Renewable Energy (MNRE)?

The Ministry of New and Renewable Energy (MNRE) promotes and coordinates renewable energy development in India. It plays a crucial role in formulating policies, implementing programs, and fostering research and development in the renewable energy sector.

Exam Tip

MNRE is a key institution; understand its mandate and recent initiatives.

5. How do customs duty exemptions impact the common citizen?

Customs duty exemptions on clean energy components can lead to lower costs for renewable energy products like solar panels and batteries. This can make clean energy more affordable and accessible to households, potentially reducing electricity bills and promoting a cleaner environment.

Exam Tip

Consider the socio-economic impacts of such policies for interview questions.

6. What are the potential drawbacks of providing customs duty exemptions?

While beneficial for promoting domestic manufacturing, customs duty exemptions could potentially impact government revenue. There might also be concerns about the quality and competitiveness of domestically manufactured goods compared to imports in the initial phases.

Exam Tip

Be prepared to discuss both sides of the argument in the interview.

7. What are the recent developments related to clean energy manufacturing in India?

Recent developments include increased investments in the renewable energy sector, government initiatives like the FAME India scheme for electric vehicles, and policy support for battery storage systems. The current budget's focus on customs duty exemptions further strengthens this trend.

Exam Tip

Stay updated on the latest government policies and investments in the renewable energy sector.

8. Why is this budget's focus on clean energy manufacturing in the news?

This budget's focus on clean energy manufacturing is in the news because it signals the government's commitment to promoting sustainable development and reducing dependence on fossil fuels. The specific measures, like customs duty exemptions, are significant steps towards achieving these goals.

Exam Tip

Understand the broader context of India's energy policy and climate change commitments.

9. What are the important numbers to remember from this budget related to clean energy?

Important numbers to remember include the 7.5% reduction in sodium antimonate duty to 0%, the ₹32,914 crore allocation for MNRE, and the ₹22,000 crore earmarked for the Surya Ghar Yojana.

Exam Tip

These figures are important for Prelims factual questions.

10. What is the historical background of the push for clean energy manufacturing in India?

The push for clean energy manufacturing in India has historical roots in the nation's commitment to sustainable development. India's energy policy has evolved over decades, initially focusing on conventional sources like coal and gradually shifting towards renewable energy with the establishment of the Ministry of New and Renewable Energy (MNRE).

Exam Tip

Understanding the evolution of India's energy policy provides context for current initiatives.

Practice Questions (MCQs)

1. Consider the following statements regarding the Pradhan Mantri Surya Ghar Muft Bijli Yojana: 1. The scheme aims to electrify one crore households with solar energy by 2026-27. 2. The scheme has earmarked ₹22,000 crore for the current fiscal year. 3. The scheme focuses exclusively on urban households. Which of the statements given above is/are correct?

  • A.1 and 2 only
  • B.2 and 3 only
  • C.1 and 3 only
  • D.1, 2 and 3
Show Answer

Answer: A

Statement 1 is CORRECT: The Pradhan Mantri Surya Ghar Muft Bijli Yojana aims to electrify one crore households with solar energy by 2026-27, as stated in the news summary. Statement 2 is CORRECT: The scheme has earmarked ₹22,000 crore for the current fiscal year, as mentioned in the news summary. Statement 3 is INCORRECT: The news summary does not specify that the scheme focuses exclusively on urban households. It aims to electrify households in general, implying both urban and rural areas are included. Therefore, only statements 1 and 2 are correct.

2. Which of the following materials has seen a reduction in basic customs duty from 7.5% to zero, as announced in the recent budget, to encourage domestic solar glass manufacturing?

  • A.Lithium carbonate
  • B.Sodium antimonate
  • C.Silicon wafers
  • D.Polysilicon
Show Answer

Answer: B

The correct answer is B) Sodium antimonate. According to the news summary, the basic customs duty on sodium antimonate, used in solar glass manufacturing, has been reduced from 7.5% to zero. The other options are related to solar or battery manufacturing but were not mentioned in the context of customs duty reduction in the provided summary.

3. Consider the following statements: Statement I: Customs duty exemptions are provided to encourage domestic manufacturing of clean-energy components. Statement II: Specified capital goods for manufacturing lithium-ion cells for battery energy storage systems are exempted from duty. Which one of the following is correct in respect of the above statements?

  • A.Both Statement I and Statement II are correct and Statement II is the correct explanation for Statement I
  • B.Both Statement I and Statement II are correct and Statement II is not the correct explanation for Statement I
  • C.Statement I is correct but Statement II is incorrect
  • D.Statement I is incorrect but Statement II is correct
Show Answer

Answer: B

Both statements are correct. Statement I reflects the general policy of providing customs duty exemptions to encourage domestic manufacturing of clean energy components. Statement II provides a specific example of this policy, mentioning the exemption for capital goods used in manufacturing lithium-ion cells. However, Statement II is not the *correct explanation* for Statement I; it is merely an example of the broader policy.

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