Govt seeks to set up three power gear making zones

“This scheme is for setting up of three manufacturing zones for power and renewable equipment to be set up in three different states. The facilities shall be based on cutting edge, clean, and energy efficient technology for minimizing dependency on import of equipment, critical components, basic raw material, and critical spares required for the power sector and renewable (energy),” the budget documents said.

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Power is a strategically important sector and the move to set up dedicated manufacturing zones is aimed at reducing imports of Chinese equipment and attracting private investments across power generation, distribution, and transmission in green and conventional energy spaces. On 15 December, Mint reported on the plans to set up these zones, one each in a coastal state, a hill state and a land-locked state, by offering incentives such as land and electricity at attractive prices. The government has drawn up a list of equipment that it wants to be manufactured in these zones.

Building these zones is part of India’s campaign to encourage self-reliance. India imported $2.16 billion worth of solar photovoltaic (PV) cells, panels, and modules in 2018-19. Of the ₹71,000 crore spent on conventional power equipment imports, Chinese products accounted for nearly one-third or around ₹20,000 crore. The Centre is looking at enabling manufacturing of all power sector equipment in India in the next three years.

The announcement comes amid massive troop build-up along the Line of Actual Control in eastern Ladakh since 15 June 2020 clashes between the two sides that left 20 Indian soldiers and an unspecified number of Chinese soldiers dead.

The move also assumes significance considering that India’s per capita power consumption is about 1,149 kilowatt-hour (kWh) compared to the world’s per capita consumption of 3,600 kWh. This is expected to grow with the government planning to leverage electricity for induction cooking and to improve quality of electricity access.

The three zones will have a minimum land area of 300 acre each and states will have to compete to being part of the programme. States will be selected on the basis of manufacturing incentives and the price of land and electricity. The Centre will set up facilities requiring an investment of ₹500 crore each for the zones, in addition to its production-linked incentive scheme.

The Centre is also working on operationalizing a list of approved manufacturers for government-supported schemes, including projects from where electricity distribution companies procure electricity for supply to consumers. A similar approved list of modules and manufacturers exists for the clean energy sector.