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India

India

ORDERS FLOOD IN AS FISCAL YEAR ENDS

The rate of development of installed wind power capacity in India far exceeds that in any single European country and the sudden influx of orders for wind turbines in India currently flooding in to manufacturers in the West are a direct result of India's fiscal policy.

India now has just under 557 MW of installed wind power capacity up and running. Reporting on installations until September, the Ministry of Non Conventional Energy Sources (MNES) also reveals that nearly 509 MW of the total has been completed by the private sector. This compares with the 1990-92 fiscal year when private sector installations amounted to no more than 9 MW.

During the first half of the current financial year, private firms have installed 206.350 MW, compared with 235.535 MW for the whole of the 1994-95 financial year. Another 200 MW is expected in the ground by March, bringing the total amount of wind installed in one year in India to some 435 MW. This rate of development far exceeds that in any single European country at the moment and is reminiscent of the hey days of the California wind rush in the early 1980s.

Orders for wind turbines are currently flooding in to manufacturers in the West -- in many cases several weeks and even months later than expected. During this waiting period many had built up stockpiles of wind turbines and components to worryingly large proportions. The sudden influx of orders now being experienced is a direct result of India's fiscal policy. India's financial year starts in April. If machines are installed before September, the company is entitled to a 100% tax depreciation for that year -- it can write off the total cost of the machine against tax. If installed before the end of March next year, 50% depreciation is allowed for the current financial year, and 50% depreciation again for the next year.

Widespread fears that these lucrative tax breaks could suddenly be withdrawn tends to lead to bouts of "panic order syndrome" on the Indian market. Large industrial companies install wind plants to secure their own power supply in a country where power cuts are all too frequent. But they make their investment in wind energy according to their tax planning for the relevant fiscal year.

While wind companies are non too happy with this roller coaster order process, the six month pauses are welcomed by the Indian administrating authorities. The breaks give them time to catch up with the paperwork and allow the State Electricity Boards (SEBs) to plan for uptake of the power being produced.

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