For the third year in a row, the government has increased the cess levied on coal, lignite and peat. While increase of Clean Environment Cess (formerly called clean energy cess) to Rs. 400 per tonne from Rs. 200 per tonne may result in availability of more funds to the renewable sector, the reduction of accelerated depreciation (AD) from 80 per cent to 40 per cent from April 2017 is seen as a negative measure that may lead to increase in wind tariffs, in particular for projects set up after March 2017.
“We wish to reiterate that the Accelerated Depreciation limit of 80 per cent should continue till 2022, aligned to the government target of 175 GW renewables by 2022 and to boost manufacturing under the Make in India vision,” said Tulsi Tanti, Chairman and Managing Director, Suzlon Group.
"The excise duty reduction from 12.5 per cent to 6 per cent on materials used for parts and sub-parts of rotor blades for wind operated electricity generators is a positive move. However, the imposition of service tax on freight charges incurred for transport of goods by sea will adversely impact the competitiveness of Wind turbine manufacturing in India and hence the finance minister should also review the same,” he added.
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Manish Aggarwal, Partner and Head of Energy and Natural Resources, KPMG in India pointed out that reduction in AD was a little dampener for the sector. “However, this is in line with the overall direction outlined by FM in respect of reduction in corporate tax rates while doing away with various tax exemptions,” he added.
Presently, wind sector has dominant share in overall renewable capacity in the country. As on January 31, 2016, cumulative grid-interactive clean energy capacity in the country was 39,512 MW, of which wind accounted for 25,189 MW.