India set to revive wind tax-break

The Indian government is planning to reintroduce a well-loved tax break known as accelerated depreciation (AD) for wind farm owners, in a move that would send a jolt through the world’s fourth-largest wind market.

Having watched the Indian wind market shrink by 47% in 2012 after two critical support mechanisms were binned last year, Delhi reinstated the generation-based incentive (GBI) in February to cheers from industry.

That move alone has led some experts, such as the Global Wind Energy Council (GWEC), to predict a return to growth from next year, despite the GBI being seen as carrying more risk for investors than the AD mechanism.

Investors can either choose to avail themselves of the GBI or the AD scheme.

However, the Ministry of New and Renewable Energy has been tipped to reintroduce AD for wind farm owners as well, according to press reports. The proposal is understood to be awaiting Cabinet approval.

India’s wind market has long been propelled by tax breaks. Under the AD mechanism, wind farm owners were able to write-off taxes equivalent to 80% of the upfront cost of a project until April of last year – when the figure dropped to 15%.

Trade groups like the Indian Wind Power Association have railed against the move, saying it has had a significant impact on small and medium-sized businesses in the country.

The proposed revival of AD would allow investors to retroactively take advantage of the scheme back to spring of last year.