Budget 2023 Expectations: Wind Energy Industry Seeks Customs Duty Relief To Continue

India's wind industry is seeking relief on import tariffs to continue in Budget 2023 as it braces for more competition from the solar sector.

The industry wants the government to extend the Concessional Customs Duty Exemption Certificate by a few years for products such as Balsa wood and permanent magnets, DV Giri, president of the Wind Turbine Manufacturers Association, told BQ Prime. The scheme offers lower tariffs on imported raw materials that cannot be produced in the country.

Giri said the accelerated depreciation benefit that was reduced to 40% should be restored to 80% for captive power plants.

The measures would increase the overall adoption of wind power in the country, especially when it fell on account of higher commodity costs impacting the viability of projects.

The customs duty on wind turbine components should be brought down to zero and the goods and services tax on wind turbine generators and complete systems be set at its minimum possible, Kishor Nair, chief operating officer of Avaada Group, said.

"To promote the offshore wind projects, duty and tax exemptions should be provided for all the offshore projects," Nair said.

The development of evacuation systems for new areas to set up projects also needs attention, according to Nair. The industry has proposed to develop green transmission corridors in states rich in wind potential, with necessary financial assistance to states, as well as under the control of central transmission utilities like Power Grid Corp., Nair said.

Micro, small and medium enterprises should be incentivised once again to participate in wind projects by offering them interest subventions since the tariffs are too low for them to sustain the projects, Giri said.

"They will need a tariff that is at a 20–30% premium to the current tariff," Giri said. "Before 2017, MSMEs had installed around 25 gigawatts out of the 41 gigawatts of total wind projects that were installed till then. However, after 2017, they have not received any opportunity to set up wind projects."

The government's push for renewable energy needs to be supplemented with incentives for project execution, site development, and domestic manufacturing, according to Ashwani Kumar, chief executive officer at Suzlon Group.

"A generation-linked incentive for domestic manufacturers would go a long way toward achieving our ambitious renewable energy targets," Kumar said. "I look forward to a budget that further accelerates India’s journey to 500 gigawatts of renewable energy by 2030."

Increasing incentives under the Remission of Duties and Taxes on Exported Products Scheme to 2% from 0.8% at present will help India compensate for the freight cost disadvantages against China, as well as the higher borrowing costs, Giri said.

Power should also be brought under the GST ambit, he said.