Industry looks forward to ‘indirect benefit transfer’ from clean energy fund
INDIA - It was widely expected that Budget 2015-16 would include a lot of goodies for the renewable energy sector, especially because the industry had promised Prime Minister Modi renewable energy projects to the tune of 2.66 lakh MW (266,000 MW). These expectations were further buttressed by the fact that in his first (interim) Budget of July 2014, Finance Minister Arun Jaitley had allocated an unprecedented ₹1,000 crore towards solar.
But apart from a passing mention of the Ministry of New and Renewable Energy’s well-publicised target of 1.75 lakh MW (175,000 MW) of renewable energy capacity, the Budget had absolutely nothing for the sector.
As it was, the target and the commitments were increasingly seen as unrealistic. The industry had been hoping that some measures — interest subsidy for financing projects and equipment manufacture, for instance — would have demonstrated that the targets were not just hot air.
Ramesh Kymal, Chairman and Managing Director of wind turbine manufacturer Gamesa, says he is disappointed. But the industry seems to be looking forward to ‘indirect benefits’ for which the Budget leaves some scope.
The coal cess, whose proceeds go into the National Clean Energy Fund, has been doubled to ₹200 a tonne of coal mined or imported. This can fetch ₹14,000 crore in 2015-16, and grow to ₹20,000 crore in 2019-20. The fund could help finance renewable energy projects. Sumant Sinha, Founder, Chairman and CEO of ReNew Power Ventures, a wind and solar company, stresses that renewable energy projects ought to be deemed as part of the Swachh Bharat Initiative.
Tax and transfer
The cess was introduced in 2010 and had, till September 2014, gathered ₹17,000 crore, of which ₹16,511 crore has been recommended for 46 clean energy projects. One of them includes ₹637 crore for a in Tamil Nadu.
Some in the industry, including Sinha and Vineet Mittal of Welspun, see a positive in the announcement relating to Infrastructure Investment Trusts (special purpose companies that own income generating assets.) The Finance Minister has said he would “rationalise” capital gains tax when the sponsors of the trust exit while listing the trust.
Others see hope in the ₹5,300-crore allocation made for micro irrigation (and watershed development), as these funds could help sales of solar-based irrigation pumps. Similarly, the plan to electrify 20,000 more villages sounds good to companies that build solar-powered micro-grids in rural areas. The setting up of the National Investment and Infrastructure Fund with a corpus of ₹20,000 crore could help clean energy projects.
Sumant Sinha notes that while the renewable energy industry did not get the short-term goodies it expected, the Budget would create a “more financially liquid” economy in the long term.