Until 2016 the Wind Energy sector had enjoyed accelerated depreciation (AD) of 80 per cent under the Income Tax Act. But in March 2016 (Budget) Indian govt reduced 80% depreciation to 40% depreciation. Wind Energy in India has barely survived since then.

India needs to show the WEST that India can LEAD the world into Renewable Energy Transition

What is Accelerated Depreciation?: Accelerated depreciation is…

 method of depreciation used for accounting or income tax purposes that allows greater depreciation expenses in the early years of the life of an asset.

It is very important for the government to allow 80% accelerated depreciation if not 100% depreciation in Wind Energy sector. One of the biggest reason is that wind farms have a higher cost of installation but have a much smaller footprint therefore it is very important for countries like India which have less land ratio to population.

Other benefits of 80% Accelerated Depreciation are:

1. Encouraging Investment: Higher depreciation rates will automatically incentivise investments in the wind energy sector. By allowing companies to claim higher depreciation expenses, their taxable income reduces, leading to lower tax liabilities. This, in turn, may attract more businesses to invest in wind energy projects. The govt will not need to monitor this sector for growth or provide extra subsidies from its side.
2. Renewable Energy Targets: India is falling way behind its ambitious renewable energy targets. Offering favorable depreciation rates can help expedite the deployment of wind energy projects and contribute to meeting these targets. India can use this opportunity to show the west that India can do much better than them. Such opportunities are very rarely got. So India needs to go full steam ahead.
3. Reducing dependence on Crude Oil & Coal: India heavily relies on coal and other fossil fuels for its energy needs. Increasing the share of wind energy in the energy mix can reduce the country’s dependence on imported fossil fuels and enhance energy security. This will also reduce India’s foreign exchange deficit.
4. Leveling the Playing Field: It’s essential to consider the depreciation rates offered to other forms of energy installations. If other energy sources (such as coal, natural gas, or solar) enjoy favorable depreciation rates, providing a similar benefit to wind energy installations may help level the playing field and promote cleaner and greener energy sources. Although India’s subsidies for fossil fuels have dropped by 72%, they are still nine times higher than renewable energy subsidies. Coal also gets a concessional 5% GST instead of 18% GST applied to other minerals. Significant oil and gas subsidies include the lower GST rate of 5% for domestic LPG, against the benchmark rate of 18%.
5. Economic Impact: A higher depreciation rate on wind energy installations will lead to increased demand for wind turbines, equipment, and services, providing a boost to the related industries and creating jobs.
6. Environmental Benefits: Encouraging wind energy through favorable depreciation rates aligns with the goal of reducing greenhouse gas emissions and addressing climate change.

Moreover once Indian Wind Energy sector has reached its target then the depreciation can be lowered to the current 40% accelerated depreciation.

What is more important is for India to play its role as a LEADER and LEAD the world into Renewable Energy transition. India needs to leave no stone un-turned and bring all guns to the battle in its quest for clean energy leadership. Right now China seems to be the one running away with this coveted title.

The one who controls energy will also be able to control trade. It was US till now with its petro-dollars. But as the energy transitions… who will it be?

Or will India miss its chance to lead again? … as it lost to Elon Musk & China in the EV race.