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India

India

Duty again on small turbines

The short term prospects for wind energy in India remain uncertain, yet hopeful, following the presentation to parliament recently of the national budget. Budget proposals include 20% import duty on specific parts of wind turbines up to 30 kW rated capacity, with battery chargers in focus.

With the wavering government still causing a state of nationwide turmoil, the short term prospects for wind energy in India remain uncertain. But following the presentation to parliament recently of the national budget, there is every indication that Indian manufacture of wind technology will become the priority of the future.

"The budget is a clear indication that we are now in the process of accelerating the indigenous manufacture of wind turbines," says Ajit Gupta, power advisor at the Ministry of Non Conventional Energy Sources (MNES). Budget proposals include 20% import duty on specific parts of wind turbines up to 30 kW rated capacity, with battery chargers in focus. The same 20% duty will also be charged on brake hydraulics, flexible couplings, brake callipers and turbine controllers. Until now, turbine parts such as the bearings, gearbox, yaw components and sensors have been duty free.

The new duty will cause wind turbine costs to rise significantly, according to S. Annamalai, director of Pioneer Asia Group, a wind power developer. Madhu Sudan Khemka of NEPC India, a wind turbine manufacturer, agrees. "Though we are extremely satisfied by the budget as a corporate house -- and the move towards indigenous manufacture is welcome -- certain components, like brake callipers should have been given relief." These are not readily available in India. He adds that components for turbines over 500 kW should remain free of import duty to encourage the arrival of advanced technology in India.

Despite the concerns -- and some disquiet at not having been consulted -- the Indian wind community is generally positive about the budget. Indeed, India's three blade manufacturers are ecstatic over the 10% import duty imposed on rotor blades and the removal of duty on parts and raw material for local blade manufacture.

A prerequisite to clearing imports will be a requirement for the importer to furnish a certificate to the customs authorities from an officer of the rank of deputy secretary and above at MNES. "Though we recognise that this has been imposed to prevent misuse, with MNES clearance required for each and every shipment, the whole procedure will be time consuming and arduous," comments Annamalai. MNES, however, has assured importers that a maximum of five days will be taken to clear documentation.

Further rumblings in the wind industry suggest that the finance ministry may decrease the 100% depreciation allowed on wind plants to 50%. In the present unstable political environment -- and with no loan facilities available at the moment -- this could well deter new investors from entering the wind arena, warn several observers.

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