GST rate on renewable project equipment and all components should be zero: Shirish Navlekar, Mytrah Energy
On a general note, it would be good for the Government to focus on reforms on all major fronts – infrastructure, health, education, manufacturing and services. It is critical for the economy that the banks get required re-capitalisation and operational flexibility
On the Renewable Energy Sector – there is a dire need to bridge the yawning gap between government words and actions. Exuberance expressed by government on success of solar bidding and falling solar tariffs would be short lived unless structural issues are addressed on priority. While UDAY scheme is widely expected to bring relief to the ailing Discoms, lack of will to truly implement on part of various state governments is a cause of deep concern and deliberate attempts by a few state government officials to discriminate renewable players are frightening. The Budget should address specifically –
Stricter policy implementation for Renewable Purchase Obligations (RPO) fulfillment by stakeholders.
Payment priority for renewable IPPs and a stern action for delays in payments need to be contemplated against the Discoms and their officials.
Continuation of certain incentives like GBI, 80-I tax exemptions.
Changes and relaxation in Company Law especially for infrastructure sector where there is a Holdco and a number of operating SPVs implementing different projects. The new Companies Act 2013 unnecessarily obligates and burdens the SPVs to have various KMP and other compliances just because of size of their capital exceeding the minimum threshold.
Debt Financing needs: Dependence on banks is highly undesirable and newer and more appropriate matching avenues need to be made available. Insurance and pension sectors are best suited to meet the long tenor funding requirements of infra sector, however, deprived due to their own regulatory framework of funding only AA rated entities which infra sector can never achieve on a standalone basis. Some of the large PSU sector specific funding agencies (PFC, REC) are knotted in their policies emerging from funding conventional power sector projects which are not suitable for the renewable sector.
On GST and Taxation Front – For success of not only the Renewable sector, but in the larger national interest of ensuring Energy Security, GST rate on renewable project equipment & all components should be zero. Similarly, the service components should also have minimum levy of not more than 2-4%. The present tax systems and procedures are extremely complex besides there is a greater element of hostility from the tax officials towards corporates which is driven by their “targets” for tax collection. This in itself leads to a lot of frivolous demands where the industry and entrepreneurs spend lot of time and energy in dispute resolutions and litigations which is avoidable. A strict penalty mechanism need to be devised against such deliberate and frivolous demands.