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Web Exclusive | March 2013

Biomass firms seek priority sector lending

The Union government has been urged by biomass power generators to treat them as an extension of agricultural activity and facilitate priority sector lending for the industry. They have also sought at least two per cent interest subsidy, given that the industry has made investment in backward rural areas with high risk perception. The biomass power sector, which has a total generation capacity of 1,250 megawatts, has till date invested Rs 7,000 crore.

In its pre-budget memorandum submitted to the Finance Ministry the Indian Biomass Power Association (IBPA) has sought a waiver in the minim alternate tax (MAT) for a period of 10 years or till the date of commissioning, whichever is later. The association argued that most investments in this sector, by first time entrepreneurs and overseas investors with focus on clean energy, had been made when MAT was at 11.39 per cent. It now stands at 19.99 per cent.

The Association has called for the withdrawal of excise and custom duties on plant and machinery, fuel-handing and processing equipment. Currently, major plants and machinery are exempted from excise and custom duties, subject to suppliers' not availing of central value added tax benefits or adjusted accordingly.

The process is cumbersome and difficult. On corporate social responsibility (CSR) obligation, IBPA president B Krishnakumar said the cost of green power from biomass sources by the obligated corporates were adjusted in their CSR expenditure.

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