Government to announce soon the final decision on customs duty on solar equipment

PI
04/06/2020
Latest Updates, Policy, Policy Updates, Renewables, Solar PV

Most likely in the next two month, the Ministry of New and Renewable Energy (MNRE) is expected to give a clarification on the issue of the basic customs duty (BCD) on imported solar equipment.

It was in the last budget, when the government announced a basic customs duty of 20% on solar equipment imports, but has not been imposed till date.

In this regard, Amitesh Kumar Sinha, Joint Secretary, MNRE recently stated that the matter is to be finalised after the discussion with the ministry of commerce and the ministry of finance. He further stated that the department of revenue is ready to implement whatever duty structure is decided by the two ministries.

Developers are eagerly waiting for this clarification, as the duty will greatly impact their project setup cost as well as the tariffs for the power generated.

Though there is already safeguard duty on imports of solar modules and panels in the country. It was imposed in July 2018 for a period of 2 years and is scheduled to expire on 28 July 2020.

The purpose for the imposition of the safeguard duty was to provide a level playing field for the local manufacturers against low cost Chinese imports. However, nothing has changed in these two years as Indian solar developers continued to meet their solar equipment needs by importing 80-85 percent from China, as before.

According to industry experts, the government seems interested in bringing this BCD regime for the entire solar value chain, in order to support the domestic manufacturing – as safeguard duty and other measures have not been able to give desired results.

Industry experts are of view that BCD will prove more effective barrier than safeguard duty, since it will be applicable to imports from all countries.

In this regard, Amitesh Kumar Sinha, Joint Secretary, MNRE stated that BCD should be imposed for an extended period, not like safeguard duty which is limited for two years.

Meanwhile, Vinay Rustagi, Managing Director, Bridge to India stated that he expects a levy in the range of 20-30 percent and for a longer period – 5 years or more.