Firstly, let me highlight that the income tax holiday is not part of the mega power policy, as stated in the article. The mega power policy primarily included only indirect tax sops through custom duty waiver for project related imports for mega power projects. The 10 year tax holiday, under section 80IA of IT Act, is even available to power plants not falling under the purview of mega power policy. In fact, this holiday is available to other infrastructure projects like roads, power transmission etc. Regarding whether such sops should be extended to captive power and merchant power projects, I think it will be very difficult for any policy maker to take a call. Few reasons for this are: First, many upcoming projects are a mix of sale through long term power purchase contracts (to multiple states) and short term merchant power. How would tax laws be applied "in part" to such plants. Second, many such projects have achieved financial closure or are already into construction and have their finances arranged and PPAs signed based on tax holiday and customs waiver assumptions. What would happen to such plants under development? My view is that such policies should be extended to merchant plants and captive plants as this will give an incentive for even foreign investment (and efficiencies) to come into generation. With more incentive for merchant power generation, we would have enough competition and the government may in turn find even merchant power generators competing against each other to offer short term power at competitive rates. Otherwise, only a select few Indian firms would do "across the table deals" with the state governments and central government (basically negotiated deals and not competitively bid out) to get hydro projects (like in NE region) and coal linkages allotted and hence make super normal profits on country's natural resources. It would be reasonable to extend such sops for another 10 years.