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Wind power industry body asks govt to re-introduce fiscal incentives

According to reports, Indian Wind Power Association (IWPA), Chennai-based wind energy-focused industry body, has asked the government to re-introduce two fiscal incentives to help companies invest in the clean energy sector. The twin incentives, Accelerated Depreciation (AD) and Generation-Based Incentive, were rolled back by the government in April last year.

India invested around Rs 19,200 crore to add 3,200 Megawatt (Mw) wind power capacity in 2011-12, becoming the fifth-largest wind energy developing nation in the world. However, addition of wind-based capacity declined 46 per cent to 1,700 Mw in 2012-13. “Investment of Rs 9,000 crore and installation of 1,500 Mw vanished last year,” IWPA Chairman K Kasthurirangaian said in a 20 July letter to the finance ministry.
The letter, shared with Business Standard by Kasthurirangaian, identifies the lack of incentives as a reason for the dampening of fresh investments by small scale industries and IPPs in the wind power sector. “The 5,000 Mw equipment and spares manufacturing industry had no orders and has collapsed since April 2012. The ever-vibrant wind power sector is a lame duck now,” Kasthurirangaian said in his letter to finance ministry’s advisor Parthasarathy Shome.
Accelerated Depreciation, a form of direct tax benefit, was phased out to link incentives to actual generation of power through GBI rather than asset creation and tax savings. Under the scheme, investors enjoyed benefit of upto 80 per cent of the project cost for devices like wind mills and solar cookers. An investor availing AD benefit was not allowed incentive under the GBI scheme. With the entry of Independent Power Producers (IPPs) in the market, GBI was introduced in 2009. Under the scheme, an incentive of 50 paise is provided for every unit of electricity generated.

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