Home > Government of India - Incentives

Government of India - Incentives

» India Beckons
» Incentives Galore
» Providing an investor friendly environment
» Special Economic Zones (SEZ)
» Conclusion

India Beckons!

India is one of the nations around the world that is blessed with a vast amount of solar energy every year. The Indian government, recognizing this fact and coupling it with the issue of rapidly draining fossil fuels, has taken various steps to tap into the vast quantities of solar energy for commercial use.

Indian government believes technological advances, greater public awareness, suitable policy measures and development of hybrid power systems can all help to make PV energy even more commercially viable.

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Incentives Galore!

The Indian government announced incentives for manufacturing solar cells and panels earlier this year, and it has targeted meeting 10 percent of the country's power needs through renewable energy by 2012.

In fact, the government's special incentive package for semiconductor manufacturing announced in February 2007 is touted to be an investor friendly by many experts. As per the policy, the Government would give financial incentives up to 20 per cent of the project cost in a Special Economic Zone (SEZ) and 25 per cent in non-SEZ.

The Ministry of New and Renewable Energy, earlier known as the Ministry of Non-conventional Energy Sources - have initiated innovative schemes to accelerate utilisation and exploitation of the solar energy.

That has stimulated a flurry of announcements by companies looking to join the nascent solar industry in India.

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Providing an investor friendly environment

India has also announced a number of incentives like subsidy, soft loan, 80 percent accelerated depreciation, confessional duty on import of raw materials and certain products, excise duty exemption on certain devices/systems etc. for the production and use of solar energy systems.

The Indian Renewable Energy Development Agency (IREDA) - a Public Limited Company established in 1987- provides revolving fund to financing and leasing companies offering affordable credit for purchase of PV systems. As a result, the Renewable Energy Sector is increasingly assuming a greater role in providing grid power to the Nation.

This apart, the Electricity Act 2003, National Electricity Policy 2005 and National Tariff Policy 2006 provide a common framework for the regulation of renewable power in all States/UTs through quotas, preferential tariffs, and guidelines for pricing 'non-firm' power.

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Special Economic Zones (SEZ)

Overseas entities never had it this easy and profitable to set-up base in India or to initiate a joint venture with an Indian Firm. According to the SEZ Rules, 2006:

Units may also be setup for providing services or manufacturing services to Overseas Entities subject to following conditions, namely:-

1. Capital goods, raw materials including consumables sub-assemblies, components, and semi-finished goods shall be supplied by the Overseas Entity free of cost;
2. Capital goods for setting up such facilities may also be supplied on loan or lease basis, provided the notional value of such capital goods shall be taken into account for calculation of Net Foreign Exchange Earnings under rule 53.
3. Finished goods shall be exported out of the country or transferred to the Customs Bonded Warehouse to be maintained by the Overseas entity;
4. Provided that any supplies of finished goods shall be as per the instructions of the Overseas entity.
5. The Unit shall receive the consideration for its manufacturing services in convertible foreign exchange directly from the said overseas entity;
6. In case the said manufacturing facility is used by the Unit for carrying out production on its own account, separate accounts shall be maintained for the manufacturing and service activity.

("Overseas Entity" means a non-resident or a person of foreign origin and includes a company not incorporated in India.)

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Conclusion

It can be safely said that India is churning out innovative incentive schemes for mass adoption of solar power. Government policies will be implemented for market adoption and growth, such as financing schemes for individuals investing to absorb the high upfront costs.

OnePV strives to bring you the best of Indian geographic, infrastructural and labour resources to your table to help you set-up a base in India or provide consulting on PV matters or supply you with PV products. Contact us for more details.

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