India has the fifth-largest power generation portfolio worldwide. The country transitioned from being the world’s seventh-largest energy consumer in 2000 to the fourth-largest one within a decade. This rapid growth of power capacity and a subsequent rise in demand can be attributed to several factors like economic growth and increasing prosperity, growing rate of urbanization, rising per capita energy consumption and widening access to energy in the country.
To maintain this momentum, the Finance Minister Arun Jaitley has allocated Rs. 5036 crore for the renewable sector in Budget 2016.
In Budget 2015-16, the minister had revised the target of renewable energy capacity to 1,75,000 MW till 2022, comprising 1,00,000 MW solar, 60,000 MW wind, 10,000 MW biomass and 5,000 MW small hydro. Considering the target, the industry was expecting tax incentives and financial support to make ‘solar’ an attractive and viable option. The renewable energy ministry had also sought over Rs.10,000 crore as increased budgetary allocation to meet this ambitious target.
By way of incentive, the minister has reduced excise duty on carbon pultrusions used for manufacture of rotor blades, and intermediates, parts and sub-parts of rotor blades for wind operated electricity generators, to 6 percent from 12.5 percent. Whereas, excise duty on unsaturated polyester resin, hardeners/hardener for adhesive resin, vinyl easter adhesive(VEA) and epoxy resin used for manufacture of rotor blades, and intermediates, parts and sub-parts of rotor blades for wind-operated electricity generators has been increased to 6 percent from nil.
For India’s economy to continue growing, the country will continue to rely on fossil fuels like coal for power generation. As part of this growth, the Clean Energy Cess on coal, lignite and peat has been renamed the Clean Environment Cess and has been raised from Rs. 200 per tonne to Rs. 400. The government also plans to use the funds gained from these taxes to further develop renewable energy.