Various initiatives taken by the government in 2018 have paved the way for greater opportunities for investments in the energy and infrastructure sector in India. This update summarises some of the key developments in the past year and gives a brief overview of what can be expected in 2019.
THE YEAR THAT WAS
The year 2018 was an eventful year for the Indian energy and infrastructure sector. While imposition of duties and policy uncertainty caused a slowdown in the renewable energy sector and resulted in significant decline in auction activities, we saw an all-time high budgetary allocation coupled with a policy push by the government for the infrastructure sector including roads, airports and electric vehicles.
MAJOR DEVELOPMENTS IN 2018
1. Renewable Power
The Government of India (GoI) has a target of growing its renewable energy (RE) capacity to 175 GW by 2022, from about 75 GW currently. India has successfully introduced competitive bidding under the National Solar Mission (NSM) in the solar sector, which has resulted in a rapid increase in installed solar power capacity by 2.6 GW in 2014 to 24 GW in November 2018 and similar 12 GW of solar power projects are in various stages of construction.
2018 also saw a surge in new tenders. However, actual project allocations were few because of multiple instances of tender cancellations, policy uncertainty due to imposition of safeguard duty on the imported solar modules and implementation of Goods and Services Tax. These are potentially dangerous trends and unless corrected immediately could deliver a serious blow to the government's stated ambition for the sector.
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