GST cut to help renewable energy developers save ₹1–1.5 trillion: Govt
The tax cuts come at a time when India is looking at ways to mobilize more funds to the meet its ambitious energy transition goals. The government is holding consultations on ways to mobilize about $1 trillion in green finance to boost investments into clean energy.
New Delhi: Renewable energy developers and investors in the energy transition space are likely to save ₹1-1.5 trillion due to the recent indirect tax cuts, as India aims to achieve 500 GW installed non-fossil power generation capacity by 2030, Union minister for new and renewable energy Pralhad Joshi said on Monday.
The new Goods and Services Tax (GST) rates came into effect on Monday. Tax rate on renewable energy equipment, including solar cells, biogas plants and windmill equipment has been reduced to 5% from 12%.
Addressing a national conference on energy storage in New Delhi, Joshi said: "Approximately 248GW of non-fossil capacity will be implemented further in the next five years. With this GST cut, savings will stand around ₹1 lakh crore to ₹1.5 lakh crore. So, that will be the biggest ever advantage. This is an estimate."
So far, about 251-252 GW of non-fossil capacity has been added, of which about 96% comes from renewable capacity—solar, wind and hydro.
The tax cut also comes at a time when the government is looking at ways to mobilize more funds to the meet the ambitious energy transition goals. Mint earlier reported that the government is holding consultations on ways to mobilize about $1 trillion in green finance to boost investments into clean energy as the 2030 deadline for 500GW of non-fossil capacity nears.
Earlier in the day, the minister said that that the Centre would soon hold the second round of talks with states on energy storage, energy transition and power purchase agreements (PPAs). The plan to hold another consultation with states on PPAs gains significance as around 30GW of projects remained stalled as developers have failed to find buyers.
Mint earlier reported that the government is likely to allow renewable energy developers to surrender stalled projects without invoking bank guarantees, provided power purchase agreements have not been signed.
“Energy transition, energy storage and PPA are very serious issues, and we are consistently holding talks with states. We have already completed one round of talks with states, and very soon we will be holding the second round of talks," Joshi said earlier in the day at the 6th CII International Energy Conference and Exhibition.
Calling on the private sector to increase their investment in research & development (R&D) in renewable energy sector, the minster said the country is exploring the prospects of indigenous manufacturing of polysilicon, ingots and wafers for production of solar cells.