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Expectations for India’s Energy Sector in Budget 2025

India’s energy sector has been growing rapidly for the past few decades. Here’s a look at some of the most important features of the industry:

  1. The Indian energy sector is governed by the Union Government with a combination of five ministries; Power, Coal, Petroleum & Natural Gas, Renewable Energy and Atomic Energy

  2. India’s energy sources range from coal, natural gas, and oil to wind, solar, hydro and biomass (like geothermal or nuclear energy)

  3. India’s policy focus has been on investments in infrastructure and energy as these two aspects contribute greatly towards the growth of the economy

  4. Both natural gas and other renewable sources of energy have increased in popularity and are also the ones that are least affected by COVID-19.

Key Expectations from Budget 2025 for the Energy Sector

Some of the expectations that the energy sector expects from the upcoming budget include:

  1. Push for renewable energy, regulatory reforms, development of infrastructure etc.

  2. Promotion of cleaner energy and sustainable growth

  3. Reduction of the GST on Auto LPG from 18% to 5% 

  4. Incentives for green hydrogen to help the country transition to a low-carbon economy

  5. Helping bridge the gap between sustainability goals and actions

  6. Adoption of policies that help with environmental protection

  7. Strengthening the energy efficiency by focussing on developing India’s building infrastructure 

  8. Promoting provisions that help further the initiatives in green tech

  9. Increased support for achieving net-zero emissions by 2070, including measures to boost the share of natural gas in the energy mix.

Government's Focus on Sustainable Energy

Keeping its focus intact on sustainable energy, here are some of the developments that the government has initiated:

  1. The government’s Production Linked Incentive or PLI schemes help promote domestic manufacturing of solar cells and modules.

  2. The government has also announced a Green Hydrogen Mission for producing 5 MMT of Green Hydrogen by 2030 to decarbonise refineries and the fertiliser sector

  3. Launched in 2019, the PM KUSUM scheme is a clean energy initiative to help solarise agriculture pumps of around 3.5 million farmers.

Additional Read: What to Expect for the Agri-Tech Industry?

Impact on Oil and Gas Industry

The budget for 2025 might have certain impacts on the oil and gas industry. These include:

  1. The possibility of domestic oil production getting a huge boost due to the government's initiatives

  2. The industry also hopes to see an increase in the consumption of gas along with the adoption of alternative fuel sources

  3. Possible relief to oil and gas producers from adverse economic issues from high taxes and production costs  due to the rising crude oil prices 

  4. Increasing the share of natural gas in the overall energy mix to achieve the goal of net zero emissions by 2070

Role of Private Sector in Energy Development

The private sector plays a huge role in the energy development of the country. Here are a few reasons why that is:

  1. Private sector participation in the energy sector has led to improvements and functional efficiencies in energy distribution across the  country

  2. The private sector is also better placed to provide high-quality service helping retain more customers

  3. Increased investment in real-time energy consumption, infrastructure, AI, technology etc.

  4. Better energy efficiency due to innovations through the private sector  

  5. Expansion of availability and accessibility to electricity from various sources including green energy making the energy mix more sustainable.

Challenges and Opportunities for Innovation and Technology in Energy 

Some of the challenges in the energy sector include:

  1. Due to rapid economic growth, the demand for energy has also grown and this needs a shift away from fossil fuels

  2. India needs to triple its wind and solar capacity to greater than 500 Gigawatts to bridge emission gaps

  3. India’s energy transition needs  investments of up to $9.2 trillion annually 

Some of the opportunities in the Indian energy sector include:

  1. Creation of millions of jobs and reduction in greenhouse gas emissions

  2. The country’s long coastline and ample sunlight can help renewable power generation through solar, wind and hydro sources.

Additional Read: Power Sector’s Expectations from Budget 2025

Additional Read: What to Expect for MSME Sector

Conclusion

With the upcoming budget, the Indian energy sector is going to see quite a few shifts. With expectations like:

  1. Push for renewable energy, regulatory reforms, development of infrastructure etc.

  2. Promotion of cleaner energy and sustainable growth

  3. Reduction of the GST on Auto LPG from 18% to 5% 

  4. Incentives for green hydrogen to help the country transition to a low-carbon economy

The Indian energy sector could very well experience impacts like:

  1. Possible relief to oil and gas producers from adverse economic issues from high taxes and production costs  due to the rising crude oil prices 

  2. Increasing the share of natural gas in the overall energy mix to achieve the goal of net zero emissions by 2070

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.

This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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