IWPA urges government to restore the Accelerated Depreciation scheme for wind energy

On behalf of the Indian Wind Power Association, a 17-year-old non-profit association with over 1300 wind energy generators as members, the chairman of IWPA K. Kasthurirangaian, has written to the government saying that small and medium industries are no longer able to invest in wind energy after the AD scheme has been withdrawn.

“AD enables MSME (micro, small and medium enterprises) industries to use the profits in their industries to pay initial advance / margin money for ordering wind mills. Balance of cost is borrowed from banks. Government of India withdrew AD on 1.4.2012 and MSME industries are no more able to invest in cheap energy giving wind mills,” he said in the letter.

“We small and medium industries in manufacturing industries like foundry, textile have been putting up wind mills using AD provided by Government of India. Wind Energy is cheaper than grid energy and pollution free, and we MSME industries of India are also able to compete with the Chinese in the world market,” he said.

According to him, annual wind mill additions in India have come down by 50% after withdrawal of accelerated depreciation scheme, and the government is losing more in upfront annual tax collections after removal of AD, than when there was AD.

He also said that the Generation Based Incentive (GBI ) scheme – a subsidy of 50 paise per unit by government for those who sell their wind energy to grid announced by Finance Minister in 2013 budget is not suitable for MSME as small investors prefer to consume the wind they generate. “Experts say AD is not a dole or Subsidy but a deferral of tax collection and revenue neutral in 7 years,” he pointed out in the letter.