The World Bank’s Economic Prospects Report has forecast India’s economy to grow by 7.5 percent during this and the next two fiscals, retaining its top spot as the fastest-growing major economy. India’s growth estimate is the brightest spot in a grim forecast for the world economy.
The continuation of the National Democratic Alliance (NDA) government, led by Prime Minister Narendra Modi, augurs well for key sectors of the economy, including the renewable energy sector, which has been its focus area.
The industry is looking for a huge stimulus for investment, a push for the ‘Make in India’ initiative, lowering of taxes and streamlining of GST so that tax collections will go up and investment will be improved.
Given this background, the following are the key expectations of the Renewable Energy (RE) industry from the upcoming Union Budget.
— Re-introduction of accelerated depreciation at a rate of 80 per cent for windmills and solar projects to retail investors with project size less than 25 MW. The step, besides providing a level playing field for SMEs and small investors and continuing diversity in investments in the sector, will also benefit Central Public Sector Enterprises (CPSEs).
— GST on services relating to setting up, power evacuation and operation & maintenance services (OMS) of a Renewable Energy project should be capped at 5 per cent from the present 18 per cent.
— Concessional rate/preferential rate of finance is required with a 2 per cent rebate as cost and availability can potentially impact viability. This will directly benefit consumers as energy prices will be kept low.
— The export incentive must be hiked from the present 2 per cent to 10 per cent to make Indian exports competitive in the global market. Also, the Power Finance Corporation and the Indian Renewable Energy Development Agency Ltd must be mandated to allow issuance of the line of credits to OEMs for exports from India.
— The activity of generation and distribution of power should be included in provisions of Section 32(1) (iia) (Additional depreciation), 32AD (Investment allowance for setting up projects in backward area of AP and Telangana) and 115BA (Section allowing an assesse to opt for concessional rate of tax of 25 per cent.
— The profits of the undertaking engaged in the business of generation and distribution of power and infrastructure business were allowed to be reduced from the book profits for the purpose of calculating MAT. This should be restored.
— Open access and ISTS charges waiver (like SECI bidding) to all manufacturing units for their captive power requirements should be allowed.
— Creating recurring income for farmers through the Farmer’s Scheme in FiT based projects.