FDI Inflow into India’s Renewable Energy Sector
Context:
Between April 2020 and September 2023, the renewable energy sector in India attracted FDI equity investments totaling $6.1 billion.
Relevance:
GS-03 (Economy)
Key Highlights:
FDI Policy Framework:
- Current GOI FDI policy permits up to 100% FDI in the renewable energy sector under the automatic route.
Government Initiatives to Attract FDI:
- Establishment of a Project Development Cell dedicated to attracting and facilitating investments.
- Declaration of a trajectory for Renewable Purchase Obligation (RPO) until 2029-30.
- Creation of Ultra Mega Renewable Energy Parks to provide land and transmission infrastructure for large-scale RE projects.
- Expansion of transmission lines and sub-station capacity under the Green Energy Corridor Scheme for efficient evacuation of renewable power.
Key Schemes Launched:
- Initiatives like Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM), Solar Rooftop Phase-II, and 1200 MW CPSU Scheme Phase II have been introduced.
National Green Hydrogen Mission:
- Notification of rules promoting renewable energy through the Green Energy Open Access Rules 2022.
- Introduction of the Green Term Ahead Market (GTAM) to facilitate the sale of renewable energy power through exchanges.
Standard Guidelines and Waivers:
- Release of Standard Bidding Guidelines for tariff-based competitive bidding processes in solar PV and wind projects.
- Waiver of Inter-State Transmission System (ISTS) charges for the inter-state sale of solar and wind power projects commissioned by June 30, 2025.
Quality Standards and Payment Assurance:
- Notification of standards for the deployment of solar photovoltaic systems/devices.
- Implementation of measures ensuring timely payment to RE generators, including power dispatch against Letter of Credit (LC) or advance payment by distribution licensees.
