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Wind energy is continuing to grow strongly in India, with over 1,500 MW of new installed capacity in 2007, hitting 7,845 MW in total. This represents a year on year growth of 25%.

The development of Indian wind power has so far been concentrated in a few regions, especially the southern state of Tamil Nadu, which accounts for more than half of all installations. This is beginning to change, with other states, including Maharashtra, Gujarat, Rajasthan and Karnataka, West Bengal, Madhya Pradesh and Andhra Pradesh starting to catch up. As a result wind farms can be seen under construction right across the country, from the coastal plains to the hilly hinterland and sandy deserts.

The Indian government envisages an annual capacity addition of up to 2,000 MW in the coming years. Official government estimations set the total wind energy potential in India at around 45 GW.

While there is no country-wide support for renewable energies, the Indian Ministry of New and Renewable Energy (MNRE) has issued guidelines to all state governments to create an attractive environment for the export, purchase, and banking of electricity generated by wind power projects. State Electricity Regulatory Commissions (SERC) were set up in most of the states in the country, with the mandate of promoting renewables, including wind energy through preferential tariffs and a minimum obligation on distribution companies to source a certain share of electricity from renewable energy. Ten out of India’s 29 states have set up renewable purchase obligations, requiring utilities to source up to 10% of their power from renewable sources.

There are also a number of fiscal incentives for the wind energy sector established at national level, including:

  • Direct taxes – 80% depreciation in the first year of installation of a project
  • A ten year tax holiday
  • No income tax to be paid on power sales to utilities
  • Foreign direct investments are cleared very fast.

The Indian government is considering accelerating depreciation, and replacing the ten year tax holiday with tradable tax credits or other instruments. While this would be an issue for established companies, new investors are less reliant on the tax holiday, since they often have little or no tax liability.

India has a solid domestic manufacturing base, including global player Suzlon, which accounts for over half of the market, and Vestas RRB. In addition, other international companies have set up production facilities in India, including Enercon, Vestas, Repower, Siemens and LM Glasfiber.

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