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Budget 2014: Remove inverted duty structure, classify Solar PV manufacturing as Infrastructure industry

According to reports, the budget 2014-15 will be very critical for the people of India as after a long period of time, it will be presented by a Government that has an absolute majority and a mandate for Growth to achieve development.

Government was elected on the basis of their manifesto, which focused on creating jobs, kick-starting growth plans, promote manufacturing and renewable energy to address the power deficit situation in the country.

The Indian solar PV manufacturing industry has already invested close to Rs 10,000 crore and provides jobs to more than 25000 employees with total installed capacity of 1200MW of cells and more than 2000MW of modules. The government should, in addition to DCR implement Anti Dumping Duties which would help in unlocking this huge amount of public finance, kick start manufacturing in Solar and provide employment, save foreign exchange achieving multiple objectives.

Removal of inverted duty structure, classifying Solar PV manufacturing industry as ‘Infrastructure industry’, making it a priority lending sector and treating it separately from the conventional power sector are some of the broad expectations of the industry from the coming budget.

Grid parity is the holy grail of solar industry globally. The technology advancements and scale has already brought down cost of solar power significantly in India – from Rs. 18 to almost 40 percent levels at Rs 7 – 7.5 per unit (Kwhr) at a farm level, in last 3 years.

The Indian Solar PV industry has the opportunity to achieve grid parity sooner than originally planned, and way ahead of the rest of the world in terms of costs per mw.

To facilitate further competitiveness, removal of WCT, Service Tax and VAT in the entire value chain and especially in Solar EPC will be one of the big impact items that should be addressed in the budget. The Solar Energy Industry would not only get a boost, but will also get relief by reduced compliance burden due to exemption from payment of Service Tax for ‘EPC Solar Power Projects’.

Mandating Solar purchase obligation and driving their compliance annually, not only at State level, but also for industries that generate power for self consumption using diesel, is another important enabler. This will achieve multiple goals of driving solar demand, cutting greenhouse emissions, and bringing down consumption of subsidized diesel by the industry.

To encourage rooftop segment, Union budget should provide for Personal Income Tax benefits to individuals using Solar Photovoltaic. This will help in rapid utilization of solar and then drive innovative applications from consumptions side taking industry across the length and breadth of our country.

The Government should declare Infrastructure status to Solar Development and Manufacturing to drive allocation of separate funds from that of conventional power and ensure priority lending to the sector. These measures will help in the Country achieving its solarization goal.

(Deepak Puri is Chairman & Managing Director, Moser Baer India Ltd)

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