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Business opportunities in India

The Ministry of Power has formulated a blueprint to provide reliable, affordable and quality power to all users by 2012. This calls for investment of US$ 73 billion in the next five years. Opportunities are there for investment in power generation and distribution and development of non-conventional energy sources.


100% Foreign Direct  Investment is allowed under automatic route in power sector. FDI is allowed upto 100 %  in respect of projects relating to electricity generation, transmission and distribution, other than atomic reactor power plants. There is no limit on the project cost and quantum of foreign direct investment.

Liberalization of FDI Regulations:

i. 100% FDI under the automatic route is now permitted in all segments of power sector including trading;

ii. Equal participation opportunities have been extended to both domestic and foreign investors.

Fiscal Incentives

i. Customs duty on import of capital goods for Mega Power Projects has been reduced to nil.

ii. Ten year tax holiday under section 80IA of the Income Tax Act is available to enterprises engaged in development, operation and maintenance of power generation projects, subject to compliance with conditions prescribed therein.

Subsequent to ratifying the Kyoto protocol, an institutional mechanism to govern the setting up and operation of a “carbon emissions exchange” is in the process of being established. Such a move is likely to result in substantial investments in clean sources of energy as the carbon credits that would be earned through the same would serve as a significant revenue stream for the investor.

The success of the above incentives can be gauged from the following facts:

The Power Sector has received US$ 2.73 billion in FDI between April 2000 and July 2008 (DIPP)

Of the total corporate investments announced between January - June 2008, the power sector attracted the maximum amount, with announced investment aggregating US$ 40.84 billion (ASSOCHAM Study)

40 GW of generation capacity, at a cost of US$ 44 billion is presently under execution (India Brand Equity Foundation)

Wind Energy

India is the 4th largest country in the world in terms of installed wind energy. (KPMG Report, November 2007)

India’s potential of wind power is pegged at 45,000 MW while its current capacity stands at only 7,660MW. (Economic Times 2008)

Tax incentives, including availability of accelerated depreciation @ 80% under WDV method on cost incurred on setting up of wind turbine generators have resulted in significant private investment in this area.

Solar Energy

Despite the prevalence of an inherent advantage in the form of solar insulation, the potential for solar energy is virtually untapped in India.

India’s installed solar – based capacity stands at a mere 100MW compared to its present potential of 50,000MW.

Based on the substantial investment opportunities that exist in this sector, it is estimated that by 2031 – 32, solar power would be the single largest source of energy, contributing 1,200 MTOE i.e. more than 30% of our total expected requirements. (India Brand Equity Foundation)

Nuclear Energy

By 2032, the government plans to raise the contribution of nuclear energy from the current level of less than 3% to around 10% of the country's installed capacity (Angel Broking report)

The signing of the Indo – US nuclear deal has created significant opportunities for several players across the entire power supply chain, with an estimated investment opportunity of US$ 10 billion over the next five years. (JP Morgan estimate)

Further, India has among the world’s largest reserves of alternative nuclear fuel – thorium. Accordingly, substantial investment opportunities are also likely to arise once commercial production based on thorium becomes feasible

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