Action points for Budget 2017-18: Group of Secretaries want PM Modi to shift focus to renewables
A Group of Secretaries wants Prime Minister Narendra Modi to shift the focus to renewables to achieve India’s energy security and has advised labeling all hydroelectric projects as renewables, auctioning six giga watts of wind power each year and promoting electric vehicles in public and government transport. In the action points, sought by the PM for inclusion in 2017-18 Budget, the Group of Secretaries on Energy & Environment called for special dispensation for hydroelectric sector by declaring them as renewable energy and raising the threshold for financial support from less than 25 megawatts to 100 MWs.Under the current tax regime, small hydro projects up to 25 MW are treated as renewable energy whereby they are exempted from excise duty and pay value added tax of 0-5 per cent and a central sales tax of 2 per cent.
For hydroelectric projects higher than 100 MWs, the Group has suggested long term loans with interest subvention of four per cent. The action points also recommend continuation of tax incentives and benefits for the sector beyond March 2017. However, it wants only new hydroelectric projects to be part of the renewable purchase obligations — whereby it is mandatory for all states to purchase a certain percent of their power demand from renewables. In order to incentivise RPO compliance, the Group has suggested that the monies collected in the National Clean Energy Fund be used to subsidise the distribution companies. NCEF, a fund created in 2010-11, has collected Rs 54,000 crore since then.
It has suggested that the adoption of electric vehicles be accelerated by standardising its components and developing regulations while introducing green licensing plates with lower fees. It has sought an all-out effort to promote these vehicles in public transport and government vehicles within three years. The target is to raise the number of electric vehicles on roads to 7 million by 2020 from just around 20,000 now to curb diesel consumption. The secretaries also suggested low Goods and Services Tax slab in the forthcoming Budget for the renewable energy sector, energy efficient equipment, star-rated products, equipment with cleaner fuels and coal beneficiation. It has recommended customs duty exemption on LNG imports, tax on furnace oil and petroleum coke to promote biomass and duty exemption for fly ash based products used in construction.