Centre announces Rs 1,000 cr scheme for power and RE equipment making zones

The Centre has proposed a scheme worth Rs 1,000 crore to invite private companies to set up manufacturing zones for power and renewable energy (RE) equipment.

The move is part of the government's efforts to cut down on import reliance and build domestic capacity. The three proposed zones are proposed to come up by 2026-27.

The ministries of power and new and renewable energy have jointly proposed a scheme for establishment of three manufacturing zones. in which two would be brownfield on already developed land and one greenfield manufacturing zone in a coastal area of the country, said the expression of interest (EoI) published by the ministries.

“India is largely reliant on imports to meet its growing domestic demand of power and renewable energy equipment and this trend is likely to continue unless domestic capacity is ramped up with suitable policy support. The target of 450 Gw of renewable energy capacity offers a tremendous opportunity to create skilled jobs, bring about technology transfer, and contribute to the make-in-India campaign, in addition to reducing the country’s trade deficit and reliance on imports,” said the ministry in its EoI.

The proposed funding for the three zones is Rs 1,000 crore with a ceiling of Rs 4,000 crore. The power ministry will form a scheme steering committee and a ‘project management agency’  with representation from its different arms, which will shortlist the applications. The scheme aims to establish a manufacturing facility of critical equipment, components and spares required for the power sector and renewable energy sector.

Through setting an exclusive manufacturing zone, the Centre is claiming to provide hassle-free allotment of land and clearances, common testing facility, and common infrastructure facility.

“This would bring down the manufacturing cost significantly, thereby making domestic industry competitive and self-reliant in manufacturing of power and renewable energy equipment and exploit the benefits arising due to optimization of resources and economies of scale,” said the EoI.

The EoI, however, mentioned the project proposer who will apply for the scheme should have to be in possession of land and state-level clearances. The project land should have assured availability of power, water, and transport connectivity and the identified location would also need to be away from the eco-sensitive zone of protected areas. 

The scheme allows private companies to join hands with a state government and apply for the project, given the state holds 26 per cent stake in the joint venture. The financial grant earmarked for the scheme would be disbursed in tranches over five years in line with the completion of the projects.