Key highlights of Indian Union Budget FY2023-24

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Indian Union Budget: An exercise carried out by the central government every financial year, to estimate the revenue and expenditure for the forthcoming financial year. Every year 1st February, the union budget is released since 2017. The first union budget is released by RK Shanumukhan Chetty on 26th November 1947.

Key highlights of budget 2023 (SAPTRISHI)

07 key budget priorities for FY2023-24

  1. Inclusive Development
  2. Reaching the last mile
  3. Youth power
  4. Financial Sector
  5. Green Growth
  6. Unleashing the potential
  7. Infrastructure and investment

Green Growth

  1. To be established under GOBARdhan (Galvanizing organic Bio Agro Resources Dhan) Scheme for promoting circular economy; (200 - biogas plant and 300 community/ Cluster based plants) with an investement of INR 10,000 Crs. natural farming press trust of India.
  2. Promotion of battery energy storage systems
  3. Promotion of constal shipping energy efficient transportation
  4. Funds to be allocated for replacing old polluting vehicles
  5. Tax proposal - Simplification in indirect taxes to deliver (changes to cess duty on). More focus towards higher export, higher domestic manufacturing, more value addition in the economy, Green energy and mobility)
    1. Import of capital goods for Li-ion battery manufacturing (For Greener mobility)
    2. Import of the mobile camera lens (deepening value addition)
    3. Continuing concessional basic custom duty on copper scrap (augmenting raw material availability for MSMEs)

Green Energy and Electric Vehicles

Custom duty exemptions for the following:

  1. Manufacturers of Li-ion batteries
  2. Capital goods used to manufacture Li-ion batteries
  3. Production linked incentives (PLI) schemes. proposed INR. 74,850 Crs. under the PLI scheme which support to local manufacturing (Make in India);

Custom Duty hikes in 35 specific goods:

Hike increase due to the imports of goods considered as non-essential and increase aid in local production and boost "Make in India"

Some of the key goods are private jets, helicopters, consumers electronic goods plastics, steel products, and leather goods. Experts recommended reducing imports of raw materials in India's manufacturing sector. Also, helps with the cost of production, boosts domestic industries by making Indian goods competitive in global markets

VGF for BESS and more RE support for the grid: Viability Gap Funding (VGF) for battery energy storage system (BESS) projects with a capacity of 4,000 MWh, will help advance battery projects in India and support of higher renewable adoption for the grid. SECI, NTPC, and state SDA's to come up with more battery storage projects in India. Pumped Storage projects will be supported with VGF for furthering investors interests. (Government support should not exceed 20% of the total project value).

Hydrogen Mission: The national Green Hydrogen Mission will facilitate the transition of the economy to low carbon intensity and reduce dependence on fossil fuel imports. The target for the hydrogen mission is to reach annual production of 5MMT by 2030.

Replacement of old vehicles with new vehicles: With the help of the vehicle scrap policy 2022, the central and state will provide a 25% rebate on road tax for vehicles purchased to replace old once. Introduced more sops to boots vehicle scrappage.

Net Zero: Targets set for 2070 and allied climate goals with the funds of INR. 35,000 Crs. priority capital investment towards energy transaction, net zero objectives, and energy security by the Ministry of Petroleum and Natural Gas.

Soveregin Green Bonds (SGBs): The funds of INR. 19,858 Crs worth projects related to solar, wind and irrigation pumps and even metro rail are under Soveregin Green Bonds. The centre is looking to raise INR. 16,000 Crs. this fiscal year via green bonds.

RE Support: Ministry of New and Renewable Energy (MNRE) received INR. 5,214 Crs. for grid connected solar and wind projects. Central support of INR. 8,300 Crs. was announced for INR. 20,700 Crs. the interstate transmission system being built for evacuation and gri integration of 13 GW of Re from Ladakh.

Under unleashing the potential - Trust based Governance

  1. Budget focus towards the AI in-house development and Digitalization
  2. Entity Digilocker for MSME, large business, and Charitable trusts
  3. Unified skill India digital platform to link employees with skilling
  4. National digital library for childern and adolescents

Make AI in India

Measures: Three specialized AI centres are to be setup in education institutes

Expected: Outcomes: AI-based solutions in agriculture, health and sustainable cities

Scope of AI in Renewables:

Lab Grown Diamonds (LGD):

  • Measures: R&D grants for lab Grown Diamonds (LGD) sector
  • Expected Outcomes: To reduce import dependency by encouraging domestic productions
  • USD 25 billion, new investment is anticipated to be put into the RE sector
  • Development of domestic energy storage technology and RTC power supply
  • Production-linked Incentives (PLI) or Make in India in order to promote India's vision of becoming "Aatmanirbhar" and effective implementation of power distribution reforms

Policy measures to maximize carbon finance to support Green Development

  1. Revenue making on carbon credit monetization and tax-free to encourage enhanced investment in carbon neutral technologies and process
  2. Carbon credit export should be given specific inward. Outward remittance code by RBI as well as the GST council
  3. Incentivization by the Director General of Foreign Trade  (DGFT) as a major source of Green FDI in supporting India's carbon-neutral development
  4. GST Exemptions
  5. Carbon Border Adjustments Mechanism (CBAM)

Development of the Indian Carbon Market (ICM)

  1. Provide budgetary allocation in prepering a market stabilization fund to maintain the prices of carbon credits in its proposed carbon market stabilization funds to maintain the price of carbon credits
  2. To develop a framework to create a voluntary carbon market in India addressing reduced transaction costs and items
  3. ICM should develop a methodology for carbon emission reduction project registration verifications and issuance of certificates

Industry Asks,

  1. Production-linked incentives scheme in critical sectors
  2. Reduction in goods and service tax rates and duties
  3. The specific impetus for select sectors
  4. Lowering interest rate for green energy
  5. Regulatory mandates

Goods and Services Tax Budget Estimate 2023-24 (Units: in Crs.)

Central Goods and services tax (CGST)

960535

Union Territory Goods & Services Tax (UTGST)

811600

Integrated Goods & Services Tax (IGST)

3935

Goods and Services Tax Compensation cess

145000

Power

22021.81

New and Renewable Energy

9168.81

Financial Sector
Credit Guarantee for MSMEs: Revamping of the credit guarantee scheme for MSMEs will be effect from 1st April, 2023 through the infusion of INR. 9,000 Crs. in the corpus

Amendments in CGST Act: The budget provides for amending the CGST Act so as to raise the minimum threshold of tax amount of launching prosecution under GST from INR. 1 Crs. to 2 Crs., except for the offense of issuance of invoices without a supply of goods and services or both. The compounding amount will be reduced from the present range of 50 to 150% of the tax amount to the range of 25 to 100%. It will also decriminalize certain clauses of the Act like obstruction and preventing of any officer from discharging of his duties, deliberate tempering of evidence or failure to supply the information.


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