Solar Industry Demands Reduction In GST To 5% For Important Equipment

The government should reinstate 80 per cent accelerated depreciation for the solar industry - it was reduced to 40 per cent after 31st March, 2017. Currently, units in special economic zones (SEZ) are paying a minimum alternate tax (tax incidence of 21.34 per cent). We hope that Budget 2018 would remove this tax for the next 10 years to help SEZ units gain competitiveness. Section 10AA of the Income Tax Act provides 100 per cent tax holidays to SEZs for the first five years, then the percentage reduces. We believe offering 100 per cent tax holidays to SEZs for a 10-year period will aid in development.

Similarly, Section 80IA, which offered 10 years of tax holiday to entities (infrastructure) and ended on 31st March, 2017, should be extended for 10 more years to support development.

We would also request the government to bring down corporate tax from its current incidence around 34 per cent.

On the issue of GST, we want to highlight that excise duty exemption (which was the norm in the pre-GST era) is required for equipment used in solar power to reduce costs. In addition, although solar panels are kept within 5 per cent GST bracket, other important equipment that are required for solar installation are being charged more than 5-18 per cent GST. We hope that Budget 2018 will bring important equipment for solar installation under the 5 per cent GST bracket to keep cost of power under control.  

Also, input services provided to the power sector should be 100 per cent exempt/zero rated project. It will help reduce costs of power.

On policy support

We recommend that NCEF (National Clean Energy Fund) should be made available to solar manufacturing firms to expand their research and development.

Mandatory rooftop installations (by domestically sourced modules) on government buildings like school and hospitals can help in domestic demand creation and raising awareness.

Budget must be increased for the renewal and development of gird infrastructure (to support solar energy flow bump into the grid).

A total of 10 per cent production subsidy to counteract the export subsidy offered by China should be provided.

We hope that Budget 2018 would provide land for solar manufacturing units on 99 years lease and low-cost electricity.

Super-deductions of 200 per cent of the R&D (research and development) expenditure for new and clean solar technology development is also hoped for. This year's budget should prioritize solar growth even more than ever, as it promises to empower and illuminate the nation.

(Gyanesh Chaudhary is the MD and CEO of Vikram Solar.)

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