Government Initiatives/ Programs to Support Off-Grid Renewable Energy Deployment in India

Remote Village Electrification Programme

MNRE provides financial assistance for electrification of remote unelectrified census villages and unelectrified hamlets of electrified census villages where grid-extension is either not feasible or not cost effective and is not covered under Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY, now a part of DDUGJY).

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MNRE reports that the programme has been implemented in 13,059 villages and hamlets by end of 2014.

It is reported that CFA (Central Financial Assistance) of 90% of system cost is available. It is also reported that CFA capital subsidy of Rs. 85-115/W will be provided for standalone SPV power plants with battery storage in a micro grid mode/ local distribution network in unelectrified rural areas.

Subsidies/Incentives under National Solar Mission

The JNNSM originally targeted 2,000 MW of off-grid solar applications, including 20 million solar lights by 2022. Incentives provided are

  • 30% capital subsidy for general category states
  • 90% capital subsidy for special category states
  • Capital subsidy up to Rs. 100/W for home lighting and small capacity solar PV plants (<300 Wp)
    • If LEDs (up to 40W) are used the subsidy increases to Rs. 160/W
  • 45/W subsidy for solar power systems between 300 W to 1 kW
  • of Rs. 85-115/W capital subsidy for standalone SPV power plants with battery storage in a micro grid mode/ local distribution network in unelectrified rural areas
  • Capital subsidy of Rs. 27,630-57,600/HP solar water pumps

Tax Incentives for Solar Products

S.No Item Basic Duty Rate
(A) Customs duty

For all such items of import, which have not been separately specified in the Customs Tariff Notifications issued by the Ministry of Finance the peak rate of basic customs duty of 10% is applicable. (Notification No. 21/2002 item No. 86, condition 5 also referred as General Exemption No.)

1. The following goods, namely :
(A) Silicon in all forms, that is, polycrystalline silicon or ingots, for the manufacture of undiffused silicon wafers;
(B) Undiffused silicon wafers, for The manufacture of solar cells or Solar cell modules;
Chapter No. 85 item No. 8541.40.11
2. Solar cells whether or not assembled in modules or panels
3. Solarlanternorlamp
4. Equipment gadgets based on solar energy (Notification No. 25/99, List A, item Nos. 7, 18 & 38, also referred as General Exemption No.) 7.5%
5. Specified raw materials for manufacture of solar cells & modules NIL
(B) Excise Duty
1. Notification No. 6/2002 item No. 237, list 9

Specified Non-Conventional Energy devices/systems

2. Notification No. 6/2002 item No. 51

Silicon in all forms

(C) Direct Taxes Section 32
1. Accelerated 80%depreciation on specified renewable energy based devices/projects

Solar Products – Tax Incentives

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Akshay Urja Shops

Akshay Urja shops are being established in each district to make renewable energy products easily available to people and provide after sales and repair services.

  • Financial support for establishing the shop up to Rs. 2.4 Lakhs for the first two years of operation is available
  • 284 shops across 36 states and union territories are currently functioning

Related Articles

1. Solar Off-Grid Applications and Products
2. Market Status of Offgrid Solar Products in India
3. Drivers of Off-grid Solar Market Growth in India
4. Ways to Identify Other Potential and Attractive Off-grid Segments
5. Business Opportunities in Diverse Off-grid Applications