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Wind industry upbeat over restoration of accelerated depreciation

Chennai, Nov 4:

Since the beginning of the current financial year the wind power industry has had much to despair about. With the removal of both ‘accelerated depreciation’ (AD) and generation-based incentive’ (GBI) the interest level among the investors to put up wind power projects has waned considerably. As a result, the country added only 851 MW of wind power capacity in the first six months of the current year, compared with 1,402 MW in the corresponding period last year.

The tepidity is because of, more than the absence of GBI, the uncertainty regarding the restoration of the incentive – if retored, then no investor would want to lost out the eligibility for an incentive valid for the next, say, 20 years.

The GBI has been promised by the Ministry of New and Renewable Energy in various forums and there is a great expectation about it. Investments into the wind sector are waiting to come in if the generation-based incentive is reinstated.

Be that as it may, a very recent development has brought fresh cheer to the industry—the possibility of reinstatement of the other benefit, viz., accelerated depreciation.

This is said to be due to the efforts of the Indian Wind Power Association. The Association’s Chairman, K Kasturirangan, met the Union Finance Minister, P Chidambaram, a few days back in Coimbatore, to follow up on his own previous presentation to the Ministry of Finance.

“I am confident that the Government will bring back accelerated depreciation,” Kasturirangan told Business Line today. The Indian Wind Power Association has 1,500 members.

Dr K Venkatachalam, Chief Advisor, Tamil Nadu Spinning Mills Association (TASMA) fully shares Kasturirangan’s optimism. Recently, when asked if TASMA members would look at solar power projects with accelerated depreciation in mind, he said that he was confident that AD would be given for wind projects also.