India’s Renewable energy programme is currently oriented towards flow of equities from FIIs/FDI route, which is a welcome. Accelerated Depreciation & 80 IA needs to be continued till 2022 in line with the targets put up by the Government to achieve 60 GW by 2022.
There is no direct incentive policy for DISCOMS, which are under severe pressure to procure renewable energy sources. At this point, it is critical to incentivise State DISCOMs. Recently, MNRE had floated a paper on PBIs (Performance Based Incentive) to be extended to State DISCOMs, This would be an excellent move that could go a long way in removing the current hurdles faced by the sector. Additonally, Generation Based Incentive (GBI) should be continued to maintain the growth momentum and to achieve the target of 60 GW by 2022
At the moment, renewable energy products are exempted from excise. Electricity duty is not included in the proposed GST framework which can lead to increased cost of production of wind energy. It would be a good idea to peg GST at 6% slab (revenue neutral) or best to be at ‘zero’ rate. This can reduce cost of generation, making renewable energy most acceptable to DISCOMs and end consumers.
Most manufacturing operations in India are reeling under high interest rates and sky rocketing energy costs. Long term costs of wind energy are low, and the manufacturing sector should be incentivized to invest in wind energy projects. This will also provide a tremendous impetus to the ‘Make in India’ program and help this sector record higher profits. An interest subvention of 5% should be given to such manufacturing units that invest into wind energy for captive utilisation
At this critical juncture, it is important to exempt raw materials from customs duties and implement higher tariff for import of finished goods. This will help to create the right environment for renewable energy companies to set up their facilities in India and help achieve the country’s ambitious target of 175 GW.
The export potential of India’s wind energy sector cannot be overstated. Till date India has exported more than 7,000 MW of wind energy to projects across the world. In order to increase this to 20 GW by 2022, we need to implement time bound logistics subsidy (starting from 10% of the sale value to “zero” over a 5 year period) . This will not only earn forex for the country, but also further the ‘Make in India’ vision