November 2021 / India

November 25 2021

Green Hydrogen- India’s Sunrise Sector

“The thing that is going to help India with a quantum leap in terms of climate is the field of green hydrogen,” – Prime Minister Narendra Modi

Hydrogen has been an upcoming sector across the globe with huge industrial applications. Increasing number of companies across the globe are now exploring the green hydrogen. Green hydrogen has been labelled as one of the cleanest forms of energy in the world. It is being looked at as the ultimate solution to achieve net zero emissions. Through the process of electrolysis, all that is needed to produce hydrogen is water, a big electrolyser and electricity. The electric current then splits the water into its two components- hydrogen and oxygen. This means no release of greenhouse emissions since oxygen is the only by product of this process. Additionally, if the electricity used comes from renewable sources, it makes the process completely emission free.

In line with India’s ambitious green commitments, Prime Minister Narendra Modi aims to transform India into an energy independent nation by 2047 where green hydrogen will play an active role as an alternate fuel to petroleum/ fossil-based products.

To keep pace with global companies, National Hydrogen Mission was announced in Budget Speech of FY 2021-22 to produce the hydrogen from green energy sources. The scheme was announced putting Green Hydrogen at the heart of India’s energy security and climate change.

According to a report by TERI, in 2020, India’s hydrogen demand stood at 6 million Tons (MT) per year. However, studies have shown a tremendous opportunity for growth in this area. It is estimated that by 2030, the hydrogen costs will be down by 50 per cent. The demand for hydrogen is expected to see a 5-fold jump to 28 MT by 2050 where 80 per cent of the demand is expected to be green in nature. Many Indian companies have already started announcing their plans to dip their toes in the green energy sub-sector.

Recently, India’s largest oil and gas sector company, Reliance Industries Ltd (RIL) has announced its plans to go green. The company has recently announced its plans to become a net zero carbon firm by 2035. RIL has plans to invest in INR 600 billion to build a 5000-acre green energy complex in Jamnagar, Gujarat. The complex will house an electrolyser plant to produce green hydrogen.

GAIL (India), a Public Sector Undertaking (PSU) has floated a recent tender to procure an electrolyser. They are looking at locations to finalise a 10 MW plant, one of the biggest plants announced so far. GAIL has taken a step forward and has already started mixing hydrogen in natural gas on a trial basis in one of the cities. Similarly, NTPC has also shown interest to produce green hydrogen on a commercial scale. They have expressed their plans to do the same from its 4.75 GW park at the Rann of Kutch and have announced a 5 MW plant. Presently, the company is running a pilot in their Vindhyanchal unit. Further the company also has plans to set up green hydrogen fuelling station in Leh, Ladakh and will start with plying 5 hydrogen buses. They have invited Expression of Interests (EOIs) for 10 hydrogen fuel cell buses and cars.

Indian Oil Corporation Limited (IOCL) is another PSU that has announced its plans to explore the green hydrogen opportunity. They recently announced their plans to setup a green hydrogen plant at its Mathura refinery in Uttar Pradesh with a capacity of around 160,000 barrels per day. Acting firmly on their target to convert at least 10 per cent of its hydrogen consumption at the refineries to green hydrogen, they plan to convert 10 percent of the usage in their Mathura location to green sources by the year 2024. IOCL also has plans to setup a hydrogen manufacturing unit in Kochi, which is targeted to draw energy from the solar facility at the Kochi international airport. Additionally, IOCL floated a tender for 15 hydrogen PEM fuel cell electric buses.

Larsen and Tourbo (L&T) is another Indian entity looking to venture into the green hydrogen sector. According to their latest report, they have set an aim to achieve net zero emissions by 2040 and plan to spend INR 10-15 Bn on its green initiatives. In addition to exploring the possibility of manufacturing electrolysers, they are setting up a green hydrogen plant at their Hazira complex, which is scheduled to be completed withing this financial year.

Both Hindustan Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation Limited (BPCL) are planning to use hydrogen for its refineries. Furthermore, Solar Energy Corporation Limited (SECI), is looking to invite bids to build green hydrogen plants using renewable energy sources. The corporation recently released a Notice Inviting Tenders (NIT) for setting up a Green Hydrogen based pilot project at SNM hospital in Leh, Ladakh.

Establishing India as a global hub for green hydrogen generation, Ohmium International through its subsidiary in India has shipped its first ever unit of electrolyser to the United States. The electrolyser was manufactured in Ohmium’s Bengaluru facility which is India’s first green hydrogen electrolyser Gigafactory.

India’s journey into the green hydrogen space has been path breaking. As of now, the industry faces high cost of production but owing to increased demand, technology upgradation and strong government support, the industry will soon establish economies of scale, driving down the cost. In line with India’s Make in India initiative and its net zero emission targets, the sector provides tremendous scope for growth and investments.

This is authored by Kanika Verma, Invest India

November 10 2021

Govt sets up committee for determination of RoDTEP rates for exports from SEZs, EOUs

The government in August announced the rates of tax refunds under the export promotion scheme RoDTEP for 8,555 products, such as marine goods, yarn and dairy items. It has set aside Rs 12,454 crore for refunds under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme for the current fiscal.

The government has constituted a committee for the determination of RoDTEP rates for exports from special economic zones (SEZs) and export-oriented units (EOUs), as these sectors were left out in the earlier exercise, according to the DGFT. The government in August announced the rates of tax refunds under the export promotion scheme RoDTEP for 8,555 products, such as marine goods, yarn and dairy items. It has set aside Rs 12,454 crore for refunds under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme for the current fiscal.

SEZs and EOUs were kept out of the scheme in the list notified in August. The industry was demanding to include them in the scheme.

The Directorate General of Foreign Trade (DGFT) in a trade notice has said, "The government has constituted a committee for determination of RoDTEP rates for AA (advance authorisation)/ EOU/ SEZ exports; and to give supplementary report/ recommendations on issues relating to errors or anomalies, with respect to the RoDTEP schedule of rates notified."

It said members of trade and industry may submit their representations through the export promotion councils, industry associations, to the RoDTEP committee directly.

Under the RoDTEP, various central and state duties, taxes, and levies imposed on input products, among others, will be refunded to exporters. The three-member committee is chaired by former secretary G K Pillai, former CBEC member Y G Parande and former customs member Gautam Ray. It will submit its report within eight months.

  Source: Economic Times
November 29 2021

India Issues Statement on Transitional Approach with United States on Equalization Levy

India and the United States have agreed to apply the same terms under the Joint Statement issued by the United States, Austria, France, Italy, Spain and the United Kingdom to India's equalization levy and the corresponding trade action taken by the United States.

In a press release issued by India's Ministry of Finance, India noted that the interim period will be from 1 April 2022 until the implementation of Pillar 1 or 31 March 2024, whichever is earlier. India will remain in close contact with the United States to ensure that there is a common understanding of their commitments and that both countries will endeavour to resolve differences through constructive dialogue. The press release also noted that the final terms of the agreement will be finalized by 1 February 2022.

November 29 2021

United States and India Reach Transition Agreement on Digital Services Tax

On 24 November 2021, the United States and India reached an agreement on the treatment of India's digital services tax (DST) during the interim period prior to full implementation of Pillar One of the OECD-G20 agreement.

The US Treasury Department issued a related Press Release dated 24 November 2021. The Office of the US Trade Representative (USTR) also issued a related Press Release of the same date.

The US-India agreement applies the same terms of the agreements that the United States reached with Austria, France, Italy, Spain and the United Kingdom on 21 October 2021 and with Turkey on 22 November 2021.

Accordingly, in defined circumstances, the liability from India's equalization levy on e-commerce supply of services that US companies accrue in India during the interim period will be creditable against future taxes accrued under Pillar One. The period during which the credit accrues will, however, be from 1 April 2022 until either the implementation of Pillar One or 31 March 2024 (whichever is earlier).

In return, the United States will terminate the currently suspended additional tariffs on goods of India that had been adopted in response to India's equalization levy.

In January 2021, the USTR issued a report concluding that India's equalization levy is unreasonable or discriminatory and burdens or restricts US commerce. On 2 June 2021, based on the findings, the USTR determined to impose additional tariffs on certain goods of India, while suspending the implementation of the tariffs for 180 days (ending on 29 November 2021).

With this agreement with India, the United States has now reached agreement regarding the treatment of DSTs during the interim period with all seven jurisdictions that the USTR concluded had adopted unreasonable or discriminatory DSTs (i.e. Austria, France, India, Italy, Spain, Turkey and the United Kingdom).