The facilitation of outbound mergers under the Companies Act and the FEMA Regulations has contributed towards expansion of the scope of cross-border mergers in India. However, as a practical matter, the framework for cross-border mergers in India has largely been utilized only in the context of merger of foreign wholly owned subsidiaries with and into their Indian holding companies or vice versa. This note discusses certain key issues leading to limited efficacy of the cross-border merger framework in India from a regulatory and tax perspective.
India appears to be on the right track with respect to its ambitious goals and determined pivot towards renewable energy. Indeed, the country has positioned itself as one of the most attractive destinations for renewable energy projects in the world.
In light of such developments, we at S&R Associates are happy to present a quarterly roundup (January to March 2023) on renewable energy, including regulatory updates and legal insights on some key issues.
In February, SEBI released a consultation paper on disclosures, ratings, and investing related to ESG, pursuant to which an assurance-driven reporting regime based on key ESG attributes (“BRSR Core”) may be introduced soon.
BRSR Core is intended to represent a focused subset of the Business Responsibility and Sustainability Reporting (“BRSR”) framework, which SEBI had introduced in May 2021 as a voluntary disclosure regime in lieu of the erstwhile Business Responsibility Reporting (“BRR”) paradigm. The main motivation behind introducing the BRSR framework was to ensure quantitative, standardized disclosures on ESG-linked parameters. While until FY 21-22, the top 1,000 listed companies in India by market capitalization could make disclosures under this framework on a voluntary basis, such disclosures are compulsory from FY 22-23.
This article provides an overview of category-wise BRSR compliance requirements. Further, it highlights some of the benefits and opportunities, along with potential legal risks, associated with such disclosures. The article also discusses some of the concerns and innovations related to the BRSR Core framework, including in light of SEBI’s proposals with respect to adjusting intensity ratios for country-level purchasing power parity and extending disclosure requirements to corporate supply chains.
The Competition (Amendment) Act, 2023, which seeks to amend certain provisions of the Competition Act, 2002 received the assent of the President of India on April 11, 2023. This note provides an overview of the key changes to the Competition Act provided in the Competition (Amendment) Act, 2023.
Given India’s climate ambitions, a national transition to green hydrogen (“GH”) appears to be a pressing requirement. In August 2021, India announced the launch of its ‘National Hydrogen Mission’ (“NHM”) to scale up GH production. In February 2022, the Ministry of Power (“MoP”) announced the Green Hydrogen Policy (“GHP”) as the first tranche of instruments to bolster efforts in this direction. Among other elements, the GHP included an understanding that the renewable energy (“RE”) consumed for the production of GH will count towards renewable purchase obligations (“RPO”) of the consuming entity. This January, India’s Union Cabinet approved the National Green Hydrogen Mission (“NGHM”). In February, the Budget confirmed an outlay of almost INR 200 billion for NGHM. While the NGHM aims to develop policies for establishing a viable GH ecosystem, a framework of standards and regulations is expected to be formulated soon.
However, given the government’s accelerated focus on transforming India into a global GH hub, it is unfortunate that the country does not yet have a supporting framework with respect to hydrogen certification. The proposed deployment and uptake of Indian GH will depend on the widespread acceptance of instruments which guarantee its origin. In addition, such a framework can facilitate the trading of hydrogen as a commodity on national and international markets. While national certification processes must align with international markets, tracking systems will be necessary to trace attributes across the value chain, including for the purpose of creating transparency and boosting demand. Furthermore, a robust certification framework can increase investments in RE for the purpose of producing low-carbon hydrogen.
The GH value chain includes production, transportation, storage, and end-use. Each of these activities involves several underlying processes, every one of which requires the use of energy – thus leading to emissions. These emissions can vary depending on the material and technology used. Although color schemes are popular to characterize different types of hydrogen, color-coding by itself fails to provide meaningful details about associated emissions. For instance, even post-production, GH can be involved in significant emissions by the time it reaches an end-use facility, especially if the energy required for constituent processes is not fully supplied through renewable sources.
While RE certificates (“RECs”) help consumers identify the renewable attributes of the energy purchased/used, being able to have the origin credibly certified enables them to make claims about a certain volume of RE generated. For the purpose of GH certification, in addition to RECs, India could draw on tracking templates for other energy products (e.g., biofuels). Further, given that hydrogen is not a primary source of energy (only a carrier), creating a proper link between GH certificates and RECs will be important. Such linkage is additionally necessary to avoid double-counting. Nevertheless, since GH markets are still at a nascent stage, a transitional period could be allowed during which the electrolyzers used to produce GH are enabled to utilize power from existing renewable plants, backed by RECs.
In the backdrop of India’s growth story as a major IT-ITes hub in the last two decades, the Indian data centres industry is now emerging as the next attractive opportunity for investors and developers. The demand for data centres in India is being driven by the need for data storage given the Government’s Digital India and data localization policies, increased data consumption and 5G roll-out which is expected to enable adoption of data intensive technologies such as internet-of-things (IoT) and artificial intelligence (AI). The proliferation of data centres in India has also created growth opportunities in various sectors of the Indian economy, including real estate, manufacturing and renewable energy.
While the draft national data centre policy is yet to be implemented, various Indian states have adopted their respective state data centres policies to attract private investment in this capital and technology intensive sector. In this article, we compare the incentives offered under data centre policies adopted by certain Indian states which have received major investments in the data centre sector.
We are pleased to announce that Ajinkya Gunjan Mishra has joined S&R Associates as a partner based in the Firm’s New Delhi office, and is joined by associates Avani Tewari and Tarusha Airan.