Renewbale Energy Generation Unit - EOU / SEZ

[Ramakrishna Malapaka]

As we all know, the current trend is ...transition to new technologies in power sector for achieving net zero position. One amongst them is making Green molecules such as Hydrogen / ammonia / etc., Making of green molecules is nothing but using of Renewable Energy as a source and produce said items. And this sector has been given much importance and promotional support with many incentive proposals.

At the same time setting up of RE unit (such as Wind / Solar / etc.,) in DTA and supply power to Green Molecules manufacturing unit would be a very expensive proposition in terms of levy of very high rates of Indirect taxes i.e., Customs & GST on the capital goods required for the same and duties paid cannot be setoff as no output GST on supply of Electricity.

Therefore is it possible for one to setup RE units in EOU/SEZ with duty exemptions and undertake to supply RE power to such Green molecules manufacturing units in EOU/SEZ, since there seems to be no restrictions imposed in Chapter 6 of FTP or SEZ Policy, for setting up of a stand alone (non-captive) RE unit as an EOU / SEZ, by undertaking to export offshore or to SEZ or from an EOU to SEZ/EOU/STP,etc and meets positive NFE.

For information, currently, some of thermal power generation units already setup in SEZ with duty exemption benefits and supplying to Offshore and also to other SEZs.

AI Summary

Exploring Duty Exemptions for Renewable Energy Units in SEZs and EOUs: Clarifying Power Supply and Tax Implications A discussion on setting up Renewable Energy (RE) units within Export Oriented Units (EOU) or Special Economic Zones (SEZ) highlights the potential for duty exemptions on capital goods. The conversation explores whether RE units can supply power to Green Molecules manufacturing units without incurring high indirect taxes. It is noted that SEZ guidelines allow power plants in processing areas for captive consumption, but questions remain about surplus power supply to Domestic Tariff Areas (DTA) and the lack of specific guidelines for EOUs. Participants suggest consulting SEZ Development Commissioners for updated regulations and clarifications.