The Union Ministry of Power is likely to recommend a cut in the goods and services tax (GST) on components used in hydropower projects. It may seek a cut in components like turbines, steel and cement which are in the higher slabs.

The recommendation to the Ministry of Finance would be for bringing these items in the five percent slab, which was among the suggestions discussed in a recent meeting at the Ministry. As the levy on the components is at 18 percent or above, the overall sentiment is that levies should be brought down. The Central Electricity Authority (CEA) has also put forth a case for GST cut.

GST on turbine and steel stands at 18 percent, while that on cement is in the highest slab of 28 percent. The Ministry is also preparing a new hydropower policy to be put forward to the Union Cabinet for its approval. Under the policy which looks to rationalise tariffs, states in the North-east with high hydropower potential may receive central grants of around Rs 4,000 crore to pick stakes in such projects.

To achieve 500 GW installed renewable energy capacity by 2030 and net zero goals by 2070, the MoP has been looking at ways to lower tariffs and boost investment.