The government has decided to ask the RBI for removal of the priority sector lending limit for the renewable energy (RE) sector to encourage banks to lend more for green projects and help developers access easy finance. The decision was taken during a review meeting on the RE sector by Union Minister of State for Power and New and Renewable Energy R K Singh on Monday.

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The meeting was attended by various stakeholders including secretary, MNRE, senior officials from MNRE, departments of economic affairs, expenditure, financial services, revenue and representatives of public/private banks and financial institutions. In the meeting Singh also asked the banks and financial institutions to categorise RE as a separate sector different from power so that funds would flow to RE 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. The minister also added that with time, the cost of RE technology is coming down whereas the efficiency of RE equipments is improving day by day. So the low tariffs are not an aberration. He requested banks to come forward to lend to the RE sector.

On the issue of delays in land acquisition for RE projects, Singh said that Solar Energy Corporation of India (SECI) will be tying up with state governments for the land. As the land will be on lease, therefore there won`t be any upfront payment for the land.  It will also tie up transmission while floating bids. Banks and financial institutions were asked to tie up with SECI for offering predetermined loans to successful bidders.

Discussions were held about the GST issues on RE equipments/components and department of revenue was requested to place appropriate proposals 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 also held on starting a pilot project to promote solar cooking in households.