India was probably the first country in the world to have a non-conventional energy ministry. It began as a commission of additional sources of energy in the department of science & technology way back in 1981. Next year, it got incorporated in a new department of non-conventional energy sources in the energy ministry. The department became a ministry in 1992. The ministry was renamed as the ministry of new and renewable energy in October 2006. All of it was much before alternative energy resources became politically correct the world over. Today, the ministry is making valiant attempts to stay ahead. FE's Rajiv Tikoo catches up with Vilas Muttemwar. Excerpts: Renewable energy seems to be the most happening industry worldwide today. What is the business opportunity in India like? There is an investment potential of nearly Rs 1 lakh crore in renewables. I think it's a conservative figure. It will go beyond it. We have many international investors coming in and looking at India as a potential market to avail of the Clean Development Mechanism benefits. About 8% of our energy mix comes from renewables today. What is the target in the near future? Well, about 11,000-12,000 mw of our energy mix comes from grid interactive renewables today. The aim is to increase it to 14,500 mw, which will be 10% of our energy mix by the end of the 11th Plan. Is renewable energy the solution to our energy poverty? The renewable sources can be used as a supplement. We don't claim it can fulfill all our requirements. It will be complementary to conventional power. Are you satisfied with the progress? Isn't it a tad slow? We have taken initiatives to formulate policies and develop mechanisms. Results are coming in, gradually. Those who come after me will show the results. What is stopping us today? The problem is the high capital cost today. When are we going to get the economies of scale? Capital investment is high because there aren't a large number of takers today. If there is low demand, there is low supply, and there are fewer manufacturers. It's changing gradually, though. Earlier we were importing everything. Now we have got our technology in place. We are undertaking indigenous research. It has contributed a lot to the growth of the industry. Manufacturers have started getting interested. We are exporting today. The costs are coming down, gradually. When will the cost of renewables offer competition to that of the conventional energy? Earlier, everything was in a demo phase. It's now going into the market mode. You will see scaling up suddenly. We are world leaders in the field. We are fourth in installed wind energy capacity in the world. We have surpassed the Netherlands and Denmark. It's only a matter of time before the cost competitiveness also comes in. What is the government doing to encourage it? India is the probably the only country in the world where there is a separate portfolio for this ministry. Since the capital cost is high, the government has been offering fiscal and financial incentives like capital/interest subsidy, accelerated depreciation, and concessional excise and customs duties. When people call your ministry a subsidy ministry, what's your typical reaction? When I took charge of the ministry, it was known as a subsidy mantarlaya. I am trying to change that perception. It's not a subsidy ministry. We are trying to create an enabling environment. You have to also look at the fact that other countries are also promoting such industries in a big way. Why are the players in the sector, who have become big, getting incentives? They don't need it now. It is fiscal. It's 80% accelerated depreciation for wind energy devices. You see, they don't get subsidies directly. In any case, it's the finance ministry's outlook. Why don't you look at innovative financing mechanisms? We are already exploring ways and means. Today, the government offers subsidy of Rs 80,000 to Rs 10,000 crore on kerosene. My suggestion is to provide 10% of it for families living below the poverty line for buying solar lanterns and to increase the percentage in subsequent years. We can create suitable mechanisms at the panchayat level. Shouldn't the government instead create an enabling environment to make the industry market driven rather than offer subsidies? Ours is a welfare state. It's not driven solely by the factor of cost-effectiveness. If something is not profitable, it does not mean that we don't do it. In this case, we need to factor in the degradation of the environment. It's the result of the use of fossil fuels, which is also leading to climate change. We have to look after the interests of the third generation. We need to provide for the coming generations today. When you talk about the cost effectiveness of thermal power, you are not calculating the degradation caused by coal mining or the cost of loss of energy in generation, transmission and distribution. We need to look at the cost of environmental destruction caused during the lifecycle of fossil fuels. We need to look at losses and not only benefits. Why doesn't the government remove perverse subsidies? It will create a pandemonium. When should we expect the national biofuel policy? We have submitted the draft biofuel policy to the Cabinet. It has been referred to a group of ministers headed by Sharad Pawar. How are you addressing the growing concerns about diversion of agricultural land for biofuels? The Prime Minister has mentioned categorically: