Taxes and Solar Policy: Impact on the Renewables Sector

New Delhi, Aug 5 (PTI) Opposition members in Rajya Sabha on Monday said the high GST rate and inconsistency in the tax system were adversely affecting renewable power generation in the country.

During a discussion on the functioning of the Ministry of New and Renewable Energy and the Ministry of Power, Congress member Ranjeet Ranjan said the government has increased the GST on solar equipment from 5 per cent to 12 per cent and the rate should be reduced to zero to encourage people to buy solar equipment.

“The goal under the Paris Agreement is to add 500 GW of renewable energy, and we have now reached 200 GW. To reach 500 GW, you need to add 50 GW every year. In fact, you can get 15 GW by combining solar, hydro, wind and biogas. There is no answer to the question of how to reach 50 GW,” she said.

She added that the government charges interest from consumers at the market rate under the PM Surya Ghar Muft Bijlee Yojana scheme.

“In reality, PM Surya Ghar Muft Bijlee Yojana is a lollipop. It is not practical for the common man because apart from the meter charges, you charge 7 per cent interest. I demand that at least 7 per cent interest should be brought down to zero,” Ranjan said.

She added that 1 kilowatt of solar energy costs Rs 50,000-60,000.

“Out of the Rs 1.5 lakh that you are giving on Rs 78,000 and Rs 72,000, you are charging 7 per cent interest, which is the market rate. Firstly, what is a free scheme? It is not a free scheme,” the member added.

Ranjan cited alleged discrepancies in permits given to renewable energy developers.

“You give a developer a permit for 25 years and renew it every five years. In the first five years, you ask them to deliver 100 GW. There have been various complaints that when they come for renewal, you reduce their permit to 50 GW. I doubt that this is happening with small developers to give business to big players,” she said.

The Congress member informed the finance minister that the construction of solar power plants along the railway tracks was announced in February 2020. The solar power plants will be installed on 51,000 hectares of unused railway land located along the tracks, which will allow the generation of 10 gigawatts of clean energy.

“Where is that project? Have you generated at least 2 GW?” she joked.

YSR Congress Party member S. Niranjan Reddy hailed the 147.29 per cent increase in funds for the ministry to Rs 18,254 crore from Rs 7,620 crore.

He said India needs an investment of Rs 30 lakh crore by 2030, while Niti Aayog has estimated that if India wants to maintain its target of achieving net zero emissions by 2070, an investment of $10 trillion will be required.

Reddy said almost 90 per cent of the investment needs to come from the private sector and the government needs to focus on creating an ecosystem on the private side that is willing to invest.

“This would happen if the tariffs are reasonable and the amounts are paid on time. This may not be the sole responsibility of the Union government. All the states that we represent here have to go hand in hand with the Centre to ensure that we give certainty to people who come and invest in green finance,” Reddy said.

He added that artificial intelligence is entering modern data centers, so it will need a lot of energy.

“India will have to walk a delicate path where it may have to get most of these modern digital consumer agencies to switch to green energy,” Reddy said.

He said data centers need to be given energy-saving milestones to gradually begin increasing their demand for renewable energy.

American Labor Party (AAP) MP Sandeep Kumar Pathak said tax policies towards the renewable energy sector are inconsistent.

He added that import duties were once increased in the hope of increasing production, only to be lowered a year later.

“If someone creates a new project. It takes at least two years for the project to materialize and you change your principle within a year. This inconsistency will lead to nothing,” he said.

Pathak said India has 90 players, of which only 2-3 are top players, and the country needs to grow like China, which has around 2,000 players.

He stressed that the government needs to employ skilled labour to repair solar panels.

DMK Kanimozhi NVN Somu also took part in the discussion.