The Union Minister for Finance, Corporate Affairs and Defence, Shri Arun Jaitley departs from North Block to Parliament House along with the Minister of State for Commerce & Industry (Independent Charge), Finance and Corporate Affairs, Smt. Nirmala Sitharaman to present the General Budget 2014-15, in New Delhi on July 10, 2014.

Solar Industry’s perspective on the Indian Union Budget 2016-17

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As much as I have been a fan Hon’ble Finance Minister Arun Jaitley, I was not very impressed by the Union Budget speech earlier this morning (view here). All of us who are the in Solar Industry may have felt that there was stark contrast in last year’s speech (key points) and the one made today in terms of the importance given to ‘Solar Industry’. This year, ‘Solar’ was not given individual attention and came under the bigger umbrella of ‘Alternative Sources of Energy’. However, the targets set last year of achieving 1,00,000 MW of solar by 2022 remain as they are.

However, let us look at some of the points that might be of interest to the Solar Industry (refer).

Limited Accelerated Depreciation:

From April 2017, Accelerated Depreciation will be limited to a maximum of 40% which currently stands at 80%. Claiming Accelerated Depreciation for tax saving purposes was a huge incentive for industrial and commercial consumers to go solar. Although, solar already makes commercial sense, April 2016- 17 will see a massive capacity additions in order to use this incentive while it’s available. If prices don’t fall at rate which ‘compensates’ for the use of A.D in one year, then uptake of solar is expected to slow in the financial year 2017-18. For all the commercial users looking to use Solar as a tax savings tool in this limited period opportunity that exits, click here to submit your request.

Increasing the Clean Energy Cess or the Clean Environment Cess:

The cess on coal, lignite and peat has yet again doubled from INR 200/ tonne to INR 400/ tonne (refer). The previous financial year it was doubled to INR 200/ tonne from INR 100/ tonne. This would mean an increase in funds available for ‘Renewable Energy’ of which ‘Solar’ forms a large part. This means all those eligible for subsidy in Solar PV can be a little more confident about receiving it after the project is done. If we look beyond the funds, the increase in the cess will also shoot current power tariffs (refer). This would incentivise consumers at least in Metropolitan cities of Dehi, Mumbai and Kolkata to consider going solar which has an LCOE lesser than their current tariffs.

All in all, the budget did not bring any ‘Wow’ moments for our industry. However, subtly, it did indicate that incentives for solar will slowly be withdrawn while grid prices continue to rise. Meanwhile, you could scroll through our website and if you’re looking to enter the Solar Industry, there are many incentives for you in the budget. But, we bring to you an easy way to enter the industry too. Click here to find out.

Tanya Batra

Tanya keeps a close track of policy updates in the field of Rooftop Solar in India and likes to write blogs on its application for the end customer

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