Policies for development of renewable energy in India Edit
 
Name
Policies for development of renewable energy in India
Organization
Ministry of New and Renewable Energy
Country India
Year
2000
Brief description
Programmatic emphasis in MNES (then Department of Non-conventional Energy Sources) during the 1980s was on the development, dissemination, and demonstration of various renewable energy technologies. The programme was led by Government subsidies. In 1993, in order to give the required focus on commercialisation and market orientation, and in order to have greater involvement of the private sector, emphasis shifted towards policies, planning and institutional linkages to promote renewables within specific application sectors. This was accompanied by a shift from subsidies to indirect fiscal incentives such as low-interest loans for specific applications, diversified financing packages for consumers, accelerated depreciation allowances (recently reduced from 100% to 80%), reduced duties and taxes, remunerative power-purchase prices, etc.
In 2000, a comprehensive Policy for all-round development of the sector, encompassing all the key aspects, was formulated by MNES (the policy is awaiting approval by the Government), having the following broad objectives.
1. Meeting the minimum energy needs through RE
2. Providing decentralised energy supply in agriculture, industry, commercial and household sectors in rural and urban areas
3. 10% of additional grid power generation capacity to be from NCE by 2012.

To encourage private investment in the sector; the Government provides many different types of incentives to promote NCE, including accelerated depreciation allowances, capital cost subsidies, interest rate subsidies, exemption or reduction in excise duty, exemption from central sales taxes, and customs duty concessions on the import of material, components, and equipment used in NCE projects. These incentives have resulted in significant success in promoting investments in NCE.
Apart from the central government, various state governments also provide financial and fiscal incentives for the promotion of NCE. Many states have come out with preferential tariffs as well as quota for grid-connected NCE generated electricity. Some of the salient features that encourage industrial development and foreign investments are listed below.
--> Promotion of medium, small, mini and micro enterprises for manufacturing and servicing of various types of NCE systems and devices
--> Industrial clearances are not required for setting-up of an NCE industry
--> No clearance is required from Central Electricity Authority (CEA) for power generation projects up to Rs 1,000 million
--> A five-year tax holiday is allowed for NCE power generation projects
--> Soft loans are available through IREDA for NCE equipment manufacturing
--> Facilities for promotion of Export Oriented Units are available for the NCE industry
--> Financial support is available to NCE industries for R&D projects in association with technical institutions
--> Private sector companies can set up enterprises to operate as licensee or generating companies
--> Customs duty concession is available for NCE spares and equipment, including those for machinery required for renovation and modernisation of power plants. Excise duty on a number of capital goods and instruments in the NCE sector has been reduced or exempted
--> Foreign investors are encouraged to set up RE-based power generation projects on BOO basis
Links
http://mnes.nic.in/business%20oppertunity/ppi.htm http://mnes.nic.in/frame.htm?majorprog.htm http://mnes.nic.in
Keywords
Renewable Energy, Policies, Incentives
Themes
Submitted by (name & org.)
akumar@teri.res.in,TERI