While the detailed analysis will follow in the coming days, here is all that Minister of Finance, Arun Jaitley said which will affect the Indian solar market in Budget 2014. Snippets have also been included on what was said about wind and fossil resource utilization. A link to download the complete transcript of what the Minister said during the Indian Budget 2014 is available at the end of this article.
To read about what’s in for solar in the Indian Rail Budget 2014 follow the link.
Apart from the ‘only for’ solar power benefits, other benefits like 10 year tax holiday and counter benefits like additional taxes on coal would be available to solar power producers.
Please note that in remainder text of this article the Minister has been quoted verbatim (I = Mr. Jaitley), in case you would want to keep a tab on the analysis as it unfolds Subscribe to updates (scroll up).
Without further ado lets dive in !!!
Ultra Mega Solar Power Projects
It is proposed to take up Ultra Mega Solar Power Projects in Rajasthan, Gujarat, Tamil Nadu, and Laddakh in J&K. I have set aside a sum of Rs. 500 crores for this.
We are launching a scheme for solar power driven agricultural pump sets and water pumping stations for energizing one lakh pumps. I propose to allocate a sum of Rs. 400 crores for this purpose.
PV on canals & Green Corridors
An additional Rs. 100 crore is set aside for the development of 1 MW Solar Parks on the banks of canals. Implementation of the Green Energy Corridor Project will be accelerated in this financial year to facilitate evacuation of renewable energy across the country.
Customs duty concessions for solar
We need to maximize our utilization of solar power. The existing duty structure incentivizes imports rather than domestic manufacture of solar photovoltaic cells and modules. Therefore, I propose to exempt from basic customs duty:
- Specified inputs for use in the manufacture of EVA sheets and back sheets;
- Flat copper wire for the manufacture of PV ribbons.
A concessional basic customs duty of 5 percent is also being extended to machinery and equipment required for setting up of a project for solar energy production.
Excise duty exemptions for solar
I propose to exempt from excise duty:
- EVA sheets and solar back sheets and specified inputs used in their manufacture;
- Solar tempered glass used in the manufacture of solar photovoltaic cells and modules;
- Flat copper wire for the manufacture of PV ribbons for use in solar cells and modules;
- Machinery and equipment required for setting up of a project for solar energy production
Benefits available to all (solar and other) power companies
Supply of power continues to be a major area of concern for the country. Therefore, instead of annual extensions, I propose to extend the 10 year tax holiday to the undertakings which begin generation, distribution and transmission of power by 31.03.2017. This stability in our policy will help the investors to plan their investments better.
Deendayal Upadhyaya Gram Jyoti Yojana
Power is a vital input for economic growth and the Government is committed to providing 24×7 uninterrupted power supply to all homes. “Deen Dayal Upadhyaya Gram Jyoti Yojana” for feeder separation will be launched to augment power supply to the rural areas and for strengthening sub-transmission and distribution systems. I propose to set aside a sum of Rs. 500 crore for this purpose.
Incentives for wind energy
To promote wind energy, I propose to reduce the basic customs duty from 10 percent to 5 percent on forged steel rings used in the manufacture of bearings of wind operated electricity generators. Also, I propose to exempt the SAD of 4 percent on parts and raw materials required for the manufacture of wind operated generators.
I propose to exempt from excise duty: forged steel rings used in the manufacture of bearings of wind operated generators
To promote cleaner and more efficient thermal power, I propose to allocate an initial sum of Rs. 100 crore for preparatory work for a new scheme “Ultra-Modern Super Critical Coal Based Thermal Power Technology.”
Enhancing coal production
Comprehensive measures for enhancing domestic coal production are being put in place along with stringent mechanism for quality control and environmental protection, which includes supply of crushed coal and setting up of washeries.
The existing impasse in the coal sector will be resolved and adequate quantity of coal will be provided to power plants which are already commissioned or would be commissioned by March 2015, to unlock dead investments. An exercise to rationalize coal linkages which will optimize transport of coal and reduce cost of power is underway.
Tax rationalization measures for coal
I have also undertaken several tax rationalization measures. At present, coal attracts customs duties at different rates. I propose to rationalize the duty structure on all non-agglomerated coal at 2.5 percent basic customs duty and 2 percent CVD. Henceforth, anthracite coal, bituminous coal, coking coal, steam coal and other coal will attract the same duty.
This will eliminate all assessment disputes and transaction costs associated with testing of various parameters of coal. Metallurgical coke is manufactured out of coking coal. The basic customs duty on metallurgical coke is being increased from Nil to 2.5 percent in line with the duty on coking coal.
Clean energy cess on coal increased
Clean Energy Cess is presently levied on coal, peat and lignite for the purposes of financing and promoting clean energy initiatives and funding research in the area of clean energy. I propose to expand the scope of purposes of levying the said cess to include financing and promoting clean environment initiatives and funding research in the area of clean environment. To finance these additional initiatives, I propose to increase the Clean Energy Cess from Rs. 50 per tonne to Rs.100 per tonne.
Exploitation of Coal Bed Methane
It is my Government’s intention to accelerate production and exploitation of Coal Bed Methane reserves. The possibility of using modern technology to revive old or closed wells will also be explored to maximize production from such fields.
Use of PNG to be taken up in Mission mode
The usage of PNG will be rapidly scaled up in a Mission mode as it is “clean” and efficient to deliver. We have at present about 15,000 km of gas pipeline systems in the country. In order to complete the gas grid across the country, an additional 15,000 km of pipelines are required. It is proposed to develop these pipelines using appropriate PPP models.
This will help increase the usage of gas, domestic as well as imported, which, in the long-term will be beneficial in reducing dependence on any one energy sources.
What do you think?
Do you think this budget has provided enough incentives for growth of the solar sector? Let us know in your comments below. You can download the complete transcript of what the Minister said during the Indian Budget 2014 from the link below.