India’s Energy Transition: Subsidies for Fossil Fuels and Renewable Energy 2018 Annex Update

The annex details updates to India's energy subsidy landscape, noting the discontinuation of several renewable energy schemes and tax holidays for power generation and mineral oil production. It introduces new subsidies linked to the 2017 Goods and Services Tax (GST) for coal, LPG, and renewable energy equipment, alongside the Saubhagya electrification scheme and various national and state-level (Maharashtra) incentives for electric vehicles.

• Several fossil fuel subsidies were modified or discontinued by 2017, including a 100 per cent tax holiday for power generating companies that began operations after April 1, 1993, which was "discontinued in March 2017". Additionally, the tax holiday for companies producing mineral oil or refining mineral oil ceased to be applicable for blocks awarded or undertakings beginning refining after March 31, 2017.
• Multiple renewable energy support mechanisms were terminated or reduced. The Biomass Gasifier Programme and the Small Wind Energy and Hybrid Systems Programme both ended in 2017 with "no further notification regarding the continuation/extension of the scheme". The Akshay Urja Shops Programme was discontinued on June 20, 2017. Furthermore, the accelerated depreciation rate for renewable energy was halved from 80 per cent to 40 per cent in Budget 2017, and the Generation-Based Incentive (GBI) for wind and solar projects was withdrawn in Budget 2017–18.
• The introduction of the Goods and Services Tax (GST) in July 2017 created new concessional tax regimes. Coal production attracts a 5 per cent GST rate, while domestic LPG and PDS kerosene are levied at 5 per cent compared to an 18 per cent rate for other minerals in the same category. For renewable energy, GST on selected machinery for solar and wind generation is set at 5 per cent. In FY18, the subsidy conferred for renewable energy equipment was 24,667 INR crore (367.7 USD million), and for domestic LPG it was 13,964 INR crore (2081.5 USD million).
• The Saubhagya scheme (Pradhan Mantri Sahaj Bijli Har Ghar Yojana) aims for universal household electrification. The project has a total outlay of INR 16,320 crores (USD 2.5 billion), with Gross Budgetary Support of INR 12,320 crores (USD 1.9 billion). In FY18, the subsidy conferred was 2,000 INR crore (310.33 USD million).
• India implemented several electric vehicle (EV) incentives. The FAME-India scheme, running from 2015 to 2020, provided 235 INR crore (36.46 USD million) in FY18. Under the GST regime, EVs are taxed at 12 per cent compared to 28 per cent for fossil fuel vehicles. Additionally, customs duty exemptions apply to specific EV parts including batteries, battery packs, and AC/DC motors.
• The State of Maharashtra introduced a 2018-2023 EV policy targeting 500,000 registered electric vehicles. Incentives include a 10 per cent subsidy (up to INR 0.2 crore) for the first 1,000 EV passenger buses and a 15 per cent subsidy for the first 100,000 EVs (capped at INR 5,000 for 2-wheelers, INR 12,000 for 3-wheelers, and INR 100,000 for 4-wheelers). The policy also provides a 25 per cent subsidy on equipment for the first 250 commercial public EV charging stations, limited to INR 0.1 crore per station.

APA

International Institute for Sustainable Development (2018). India’s Energy Transition: Subsidies for Fossil Fuels and Renewable Energy 2018 Annex Update. https://www.iisd.org/sites/default/files/publications/india-energy-transition-2018update-annex.pdf

Chicago

International Institute for Sustainable Development. India’s Energy Transition: Subsidies for Fossil Fuels and Renewable Energy 2018 Annex Update. 2018. https://www.iisd.org/sites/default/files/publications/india-energy-transition-2018update-annex.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=India’s Energy Transition: Subsidies for Fossil Fuels and Renewable Energy 2018 Annex Update |date=2018 |url=https://www.iisd.org/sites/default/files/publications/india-energy-transition-2018update-annex.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopment2018indias, author = {{International Institute for Sustainable Development}}, title = {{India’s Energy Transition: Subsidies for Fossil Fuels and Renewable Energy 2018 Annex Update}}, institution = {International Institute for Sustainable Development}, year = {2018}, url = {https://www.iisd.org/sites/default/files/publications/india-energy-transition-2018update-annex.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }