India ministry seek tax break extension to boost wind power

India’s renewable energy ministry is seeking to extend a tax break for wind farms in the world’s third-largest market for turbines, according to news reports.

Bloomberg has reported that India’s Ministry of New and Renewable Energy has applied for approval from Prime Minister Manmohan Singh’s Cabinet to extend the incentive known as accelerated depreciation, which is set to expire on March 31.

The tax break may benefit Suzlon Energy, India’s largest wind-turbine maker, as the company is more dependent than other suppliers on customers who claim accelerated depreciation, an accounting method that allows them to write off investments at a faster rate, according to Bloomberg New Energy Finance.

If the incentive lapses, demand for turbines in India could slump by 15 per cent in the financial year starting April, according to the London-based researcher.

“The continuation of the accelerated depreciation policy will allow the sector to be more globally competitive” because it encourages investment in wind projects especially from smaller businesses, Suzlon Chairman Tulsi Tanti said in comments e-mailed to Bloomberg News last week before India revealed its budget proposal, which failed to clarify speculation that the incentive would be discontinued.

The government introduced an alternative subsidy called generation-based incentive in 2009 that rewards farms based on the amount of power they generate. That’s also due to expire on March 31 and the ministry has applied for an extension with the Cabinet, the officials said.