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To boost Renewable sector, govt will ask RBI to loosen priority sector lending limit

At the meeting, Singh also asked banks/financial institutes to categorise Renewable sector (RE) as separate sector different from power sector so that funds would flow to these projects
New Delhi: To ease the flow of funds into the Renewable Energy (RE) sector, the government is planning to approach the Reserve Bank of India (RBI) for removal of the priority sector lending limit. During a meeting chaired by Union Minister of State for Power and New & Renewable Energy RK Singh, stakeholders agreed that the move will encourage the PSU banks to lend more for RE projects and help developers access easy finance. The meeting was attended by various stakeholders including the Secretary, MNRE, senior officials from MNRE, Department of Economic Affairs, Department of Expenditure, Department of Financial Services, Department of Revenue and representatives of public/private banks and financial institutions.

‘Categorise RE as a separate sector, different from power’

At the meeting, Singh also asked banks/financial institutes to categorise Renewable Energy as a separate sector different from power sector so that funds would flow to these projects. He further said that current tariff rates discovered for various RE projects are viable as the maintenance/running cost of RE projects is very less in the long run. He also added that with time, the cost of RE technology is coming down and the efficiency of RE equipments is improving day by day. So the low tariffs are not an aberration. The minister also requested banks to come forward to lend to RE sector.

The matter of land acquisition

On the issue of delays in land acquisition for RE projects, the minister said that the Solar Energy Corporation of India (SECI) will be tying up with state governments for land. As the land will be on lease, therefore there won’t be any upfront payment for the land. The PSU will also tie up transmission while floating bids. Banks/Financial Institutions were asked to tie up with SECI for offering predetermined loans to successful bidders.

The GST issue

Discussions were held on the GST issues on RE equipments/ components and Department of Revenue was requested to place appropriate proposal before the GST council. The issue of inverted duty structure also came up for discussion during the meeting. The minister said that every measure needs to be taken to promote manufacturing in RE sector in the country, including corrections of duty structure and approval of a scheme to provide capital subsidy. Discussions were held on starting a pilot project to promote solar cooking in households.