Assessing Green Industrial Policy the India Experience
Total Page:16
File Type:pdf, Size:1020Kb
Assessing Green Industrial Policy The India experience Karthik Ganesan Poulami Choudhury Rajeev Palakshappa Rishabh Jain Sanyukta Raje March 2014 www.iisd.org/gsi © 2014 The International Institute for Sustainable Development © 2014 The International Institute for Sustainable Development Published by the International Institute for Sustainable Development. About IISD The International Institute for Sustainable Development (IISD) contributes to sustainable development by advancing policy recommendations on international trade and investment, economic policy, climate change and energy, and management of natural and social capital, as well as the enabling role of communication technologies in these areas. We report on international negotiations and disseminate knowledge gained through collaborative projects, resulting in more rigorous research, capacity building in developing countries, better networks spanning the North and the South, and better global connections among researchers, practitioners, citizens and policy-makers. IISD’s vision is better living for all—sustainably; its mission is to champion innovation, enabling societies to live sustainably. IISD is registered as a charitable organization in Canada and has 501(c)(3) status in the United States. IISD receives core operating support from the Government of Canada, provided through the International Development Research Centre (IDRC), from the Danish Ministry of Foreign Affairs and from the Province of Manitoba. The Institute receives project funding from numerous governments inside and outside Canada, United Nations agencies, foundations and the private sector. Head Office 161 Portage Avenue East, 6th Floor, Winnipeg, Manitoba, Canada R3B 0Y4 Tel: +1 (204) 958-7700 | Fax: +1 (204) 958-7710 | Website: www.iisd.org About GSI GSI is an initiative of the International Institute for Sustainable Development (IISD). GSI is headquartered in Geneva, Switzerland and works with partners located around the world. Its principal funders have included the governments of Denmark, the Netherlands, New Zealand, Norway, Sweden and the United Kingdom. The William and Flora Hewlett Foundation have also contributed to funding GSI research and communications activities. International Institute for Sustainable Development Global Subsidies Initiative International Environment House 2, 9 chemin de Balexert, 1219 Châtelaine, Geneva, Switzerland Tel: +41 22 917-8373 | Fax: +41 22 917-8054 Assessing Green Industrial Policy – The India experience Written by Karthik Ganesan, Poulami Choudhury, Rajeev Palakshappa, Rishabh Jain and Sanyukta Raje Council on Energy, Environment and Water March 2014 © 2014 The International Institute for Sustainable Development RESEARCH REPORT MARCH 2014 Assessing Green Industrial Policy – The India experience i About CEEW The Council on Energy, Environment and Water (http://ceew.in/) is an independent, not-for-profit policy research institution. CEEW addresses pressing global challenges through an integrated and internationally focused approach. It does so through high-quality research, partnerships with public and private institutions, and engagement with and outreach to the wider public. In June 2013, the International Centre for Climate Governance ranked CEEW 15th globally in its first ranking of climate-related think-tanks and number one in India. In January 2014, the Global Go To Think Tank Index ranked CEEW first in India in three categories. © 2014 The International Institute for Sustainable Development RESEARCH REPORT MARCH 2014 Assessing Green Industrial Policy – The India experience ii Table of Contents Summary ..............................................................................................................................................................................................................1 Introduction ........................................................................................................................................................................................................5 1. Background .....................................................................................................................................................................................................6 1.1 Domestic Context and Motivations .............................................................................................................................................7 1.2 Solar and Wind Energy in India: Key players, technologies and trends ......................................................................... 11 1.2.1 Solar Industry in India – The new kid on the block ...................................................................................................... 11 1.2.2 The Wind Industry in India: Progression and maturity ............................................................................................ 15 2. The Policies .................................................................................................................................................................................................. 21 2.1 Overarching Policies ....................................................................................................................................................................... 21 2.2 Survey of the Various Direct Policies ...................................................................................................................................... 24 2.2.1 Financial Incentives ............................................................................................................................................................. 24 2.2.2 Preferential Tax Treatment and Trade/Investment Restrictions ......................................................................... 26 2.2.3 Research and Development in Green Technologies ................................................................................................ 28 2.2.4 Demand Stimulation ...........................................................................................................................................................32 2.2.5 Manufacturing-Linked Incentives ...................................................................................................................................33 2.3 Survey of the Various Indirect Policies ................................................................................................................................... 38 2.3.1 Science and Innovation Policies ...................................................................................................................................... 38 2.3.2 Market Mechanisms to Price Carbon ..........................................................................................................................40 2.3.3 Other Policies/Programs .................................................................................................................................................. 42 2.4 Costing of Direct Policies ............................................................................................................................................................ 43 2.4.1 Manufacturing .......................................................................................................................................................................44 2.4.2 Project Development .........................................................................................................................................................44 3. Impact of Policies ......................................................................................................................................................................................49 3.1 Energy Access and Security ........................................................................................................................................................49 3.2 Competitiveness of Domestic Firms ...................................................................................................................................... 54 3.2.1 Solar PV ...................................................................................................................................................................................54 3.2.2 Wind Power .......................................................................................................................................................................... 58 3.3 Increased Competition in the Global Market ....................................................................................................................... 63 3.4 Impact on Employment Generation........................................................................................................................................64 3.4.1 Solar ..........................................................................................................................................................................................64 3.4.2 Wind ........................................................................................................................................................................................66 3.5 Impact on GHG Emissions ..........................................................................................................................................................67 3.6 Local Environmental Impacts ....................................................................................................................................................68