Took a pause to list down the immediate support
the sector needs. Here they are, under respective heads, to make them
easily relatable:
Policy support:
- On the one-time investment on transmission
lines and the money being lost on delayed generator evacuation, few
even resulting in loan defaults, the industry requests budgetary support
for generator loans
- As India pushes for grid integration in the
near future, the industry requests policies to permit the installation
of batteries to bring about grid stability. Additionally, with DSM
kicking in from 1st April 2026, the industry requests for grants for
grid integration to support wildly fluctuating forecasts
Taxation support:
Our foremost taxation request is for a
uniform Goods and Services Tax (GST) rate of 5% for BESS, thereby
aligning it with other renewable energy devices. Currently, solar panels
are
taxed at 5% vis-à-vis standalone batteries at
higher slabs of 18% or 28% depending on the technology and application.
Reducing this rate would significantly lower the
capital expenditure (CAPEX) for grid-scale
storage, making "Round-the-Clock" (RTC) renewable power more affordable
for distribution companies
We understand that high Basic Customs Duty
(BCD) of 25% on cells and 40% on modules were intended to protect
domestic manufacturers. However, it has increased the cost of our
projects.
I highlight this in various forums, reiterating
now too that a temporary reduction or exemption of these duties is
necessary until domestic production capacity under the PLI (Production
Linked Incentive) scheme fully matures. No point stressing developers
with supply chain disruptions. Instead, the duty cut will help us
maintain the viability of our project pipelines and meet the
commissioning deadlines
- We further seek the extension of the
Section 115BAB concessional corporate tax rate of 15% for new power
generation companies. Originally set to expire for units commencing
operations after March 2024, this extension, if allowed, can attract
long-term private equity and foreign direct investment. Alternatively, a
10-year tax holiday would allow us to reinvest our early-year profits
into further capacity expansion
- On the BESS front (which has a shorter
lifespan than solar or wind assets), we seek accelerated depreciation
and investment-linked tax credits to help us recover the high capital
costs of BESS. These incentives would improve project bankability and
encourage the integration of storage, effectively reducing energy
intermittency and stabilizing the national grid
Financing support:
- I strongly request that the renewable
sector should be in priority sector lending. Doing so, and treating them
as PPP infrastructure will unlock massive credit flow while reducing
the land-to-financing ratio from 75% to 50%
- And EPFO should be allowed to be invested
below AA+ category. Relaxing EPFO investment norms will unlock massive
pension funds to tap into a wider pool of green bonds
Other areas:
- In other areas, we would like to see the
promotion of investments in transmission corridor. This is an imperative
to ensure power generated in resource-rich remote areas is efficiently
evacuated to the national grid
- Provide clarity on TRC for claiming tax
treaty/ GAAR matter pursuant to SC order and avoid reopening of old
cases to build investor confidence
Once again, these are
sweeping areas of support that, if provided in alignment, can help us
take longer and stronger strides towards building capacity within
optimal timelines. India’s RE sector is itching to enter the matured
phase. The above can push us there!
