V.ANBALAGAN,Managing Director, Varalakshmi Starch Industries (P) Ltd

GOI wants entrepreneurs to invest in Projects to generate Renewable energy and to protect environment. The investment in such projects is very huge. For example a 500 KW BioGas Fuel run Power Generator would cost Rs. 80 lakhs as against Rs. 25 lakhs for a 500 KW Diesel run Power Generator. Similarly annual maintenance spares for a BioGas fuel run Power Generator would cost four times more than that of Diesel run Power generator. Thus the investment for renewable energy project is financially unviable and risky. So GOI gives incentives in the following forms to encourage entrepreneurs to invest in renewable energy projects. Ø Capital subsidyØ Allowing 80% accelerated depreciation in the first year itself on such investments. Because of very poor revenue returns on such investment, the entrepreneurs would be having difficulties in repayment of loans. The accelerated depreciation scheme helps the entrepreneurs to have additional cash accrual for repayment of loan. But the application of 15 % Minimum Alternate Tax (MAT) on the book profits nullifies more than 50 % of the incentive given in the form of accelerated depreciation resulting in negative DSCR for such investment. So the Finance Ministry of GOI should withdraw the application of 15 % Minimum Alternate Tax (MAT) on the book profits of the renewable energy projects especially the rural agro based small projects using Agro-industrial waste water to generate renewable energy up to 5 MW for their own captive consumption.

V. ANBALAGAN,

Managing Director, M/s. Varalakshmi Starch Industries (P) Ltd., Pappireddipatty, Dharmapuri District.

Varalakshmi Tower, 2nd floor, 127/1 Gandhi Road Salem 636007, Tamilnadu, India Telephone: +91 427 2316280, 2316281 Fax: 2318854