March 2021 / India

The term “Smart City" was coined in the initial days of the 21^st century. It implements user-friendly information and communication technologies developed by major industries for urban spaces. Its meaning has, since, been expanded to relate to the longer-term planning of cities and their development.

The UN projects that the share of the world’s population living in urban areas will increase to almost 68% by 2050 from 55% currently. This rapid urbanization increases the danger of temperature change and ties up in large cities. Heatwaves – increasingly a reality thanks to global climate change – are worse in large cities where skyscrapers, cars, and paved roads trap the warmth. Additionally, megacities face unique challenges in managing pandemics which the world has recently experienced.

Cities must therefore become smarter if they need to manage urban growth, public health, and also the challenges that include it effectively. Intelligent decisions must be taken at the strategic level. It takes over individual projects and wishes careful decisions on long-term implementations.

Around the world, city planners and residents use data-driven technologies, like the Internet of Things (IoT) and AI, to enhance traffic flows, building design likewise as waste and water systems in “smart cities.” MarketsandMarkets, a worldwide research firm, estimates that the industry of smart building technologies will rise from $61 bn in 2019 to $106 bn by 2024.

The Ministry of Housing and Urban Affairs is the nodal ministry for all policies and funding schemes related to urban development initiatives in the country. The states and cities are responsible for the discharge of the urban functions.

Key aspects that will influence the urban opportunities in India:

• Cities contribute about 63% of the GDP and will lead the revival of Indian economy like never before; this is expected to increase to 70% by 2030.
• Cities will accommodate about 60% of our population and will generate 70% of the new jobs.
• Indian cities are at different stages of development and are following different paradigms - traditional, modern, and post-modern, needing a 3-level strategy.
• High-powered empowered committee estimates urban infrastructure investment need at about $40 bn per annum, over a period of 20 years.
• National Infrastructure Pipeline, developed by the Government of India, has envisaged an expenditure of $1,500 bn in the next five years; the urban infrastructure projects constitute a significant $250 bn.
• Under our major infrastructure programs and missions, we have invested close to $30 bn in the last 5 years.
• India’s Smart Cities Mission is focussed on developing 100 cities on the “smart cities principle” - of using digital technology to improve the urban infrastructure and services.

India has over 4000 urban local bodies and towns, and the opportunities are across core dimensions – housing, sanitation and cleanliness, livelihood, IT, health and education, transport, and environment, and so on. Some of the basic components of a smart city include integrated command and control centre, smart roads and street lighting, smart water systems, security & surveillance systems, etc.

Huge investment potential exists in the field of urban infrastructure such as metro, rapid rail, buses, electric vehicles, etc. Development and production of various metro components like rolling stock, telecommunication, signalling, electrical & mechanical systems could bring in significant investments.

Even among the 100 smart cities, India has diversity in terms of size, population, economy, vision, development model, and intangibles.

The program promotes equity by design. We see potential not only in big cities like Bengaluru, Ahmedabad, Pune, Chennai but also in smaller towns (with political, heritage, or tourism significance) like Namchi, Dharmsala, Satna, and Bihar Sharif.

Hence these cities have chosen their development models which are a combination of retrofit, redevelopment, and greenfield development.

Under the Smart Cities Mission, over 5000 projects worth more than $30 bn were identified in these 100 smart cities. It is noteworthy that 1,809 projects worth over $4 bn have been completed.

To ease the life of its citizens, smart cities have been evolving and progressing into large-scale, ambitious urban expansion projects making technology an integral part of the city's ecosystem.  As technology advances, the concept of smart city has also evolved from merely incorporating technology to becoming futuristic demonstrations of cutting-edge technology themselves.

The vision behind India's smart cities of building a green, sustainable and resilient futuristic infrastructure is one of its kind. In other words, what India is building today, the world will follow tomorrow.

The Central Board of Direct Taxes (CBDT) has clarified that an individual forced to stay in India due to travel restrictions and who is facing double taxation on income for previous year (PY) 2020-21 may furnish relevant information of his circumstances to the CBDT for the purpose of claiming double tax relief.

Based on the submitted information, the CBDT will examine:

• whether any relaxation is required to be provided; and
• if required, whether general relaxation is required for a class of individuals or specific relaxation is required for individual cases.

The required information must be submitted electronically via Form-NR by 31 March 2021.

The CBDT has initially clarified that the possibility of double taxation of an individual's PY 2020-21 income does not exist when taking into consideration the provisions of the Income Tax Act read in conjunction with tax treaties. However, in the interest of understanding possible situations of double taxation, the CBDT will allow affected individuals to submit their relevant information.

The CBDT previously clarified that the period of stay in India of certain individuals will not be taken into account in determining the individual's residence status for the PY 2019-20, subject to conditions.

Full details are available here.

On 9th March, the Ministry of New & Renewable Energy (MNRE) declared the imposition of Basic Customs Duty (BCD) on Solar PV Cells and Modules/Panels, w.e.f. April 2022, following the 20 per cent BCD on solar inverters, announced earlier by the Hon’ble Finance Minister in the union budget 2021-22. If you read the Office Memorandum (OM) detailing the BCD on solar cells and modules, you can sense the urgency and need of this step, a long-standing demand by the industry. By all accounts, India’s solar industry is dependent on imports currently. China accounts for at least 80 per cent of all the modules imported into India and the rest comes from Malaysia, Thailand, and Vietnam. This import trend from China (and other countries) has been continuing for a while. Factors that underpin this massive imbalance (in favor of China) include the lower prices of these Chinese imports equipped with their superior quality, in terms of efficiency, wattage, etc., and backed by warranty from international insurers on high-performance modules. This, in turn, produced no incentive for the Indian developers/power producers to rely on domestic manufacturers, straining the government’s effort to indigenize the solar value chain further. If the price was one aspect, then the existing capacity of Indian manufacturers becomes the other face of this riddle. India’s capacity for module and cell stands at 15 GW and 3 GW, respectively. India roughly has 40 to 45 per cent of capacity utilization. India’s production capacity then becomes pale in comparison with China, as evident:

Now let us look at the Indian demand for cells and modules. India has a target to achieve an installed solar energy capacity of 280 GW i.e., around 25 GW every year till 2030. Compare this with the capacity that the domestic industry possesses, currently, it will become clear why developers/power producers are preferring imports, significantly.

It is here that the planned BCD of 25 per cent on Solar Cells and 40 per cent on Solar Module becomes a gamechanger. Once the new duty structures come into force  the costs of imported cells and modules will increase, thereby removing the cost advantage attached to the imports and increasing the reliance on the domestic industry. Further up in a solar project chain, BCD will have a knock-on effect on solar tariffs as well. For imported modules, BCD will increase the capital cost of a solar project by 23-24 per cent, resulting in an increase of 25 per cent in solar tariffs . MNRE has also released the Approved List of Models and Manufacturers of PV Modules (ALMM), whose modules will be eligible for government-owned projects in India, further increasing the industry’s confidence in domestic suppliers. Additionally, the $ 606 Mn Production-Linked-Incentive (PLI) scheme for high-efficiency PV modules, launched last year, will further incentivize the capacity enhancement of the domestic module manufacturers.

India is on a relentless pursuit of achieving self-reliance in critical sectors of its economy. The challenges from COVID-19 further emboldened its resolve in becoming a manufacturing superpower and cutting dependencies. The newly announced BCD, ALMM, and PLI will accelerate the much-needed indigenization of the solar industry and help India become 'Atmanirbhar' in solar manufacturing.

Source: Invest India