Energy firms cry foul over hike in customs duty on solar equipment

Solar power developers in India are crying foul over the government’s move to raise tariffs on imports of green energy equipment such as solar cells and modules in the budget.

The step is aimed at driving local manufacturing of such equipment and discouraging low-quality Chinese imports but companies believe the tariff increase made through an enabling mechanism in the budget will hurt their business.

Once a separate notification is issued, a new duty structure enabling a basic customs duty (BCD) of 20% on cells and modules will come into effect. Such equipment earlier did not attract any BCD.

“Not very long ago, solar was the shining bright spot in the Indian economy till the government decided to change laws and policies. As the industry continues to struggle on account of pending refunds from earlier safeguard duties, as if that was not enough, the budget has announced additional

custom duty on solar cells and modules,” said Sunil Jain, chief executive, Hero Future Energies Pvt. Ltd. “Obviously government thinks that this will encourage domestic manufacturing but forgets that never have import duties encouraged domestic manufacturing but can definitely give major setback to the solar generation sector.”

The fast-growing domestic market for solar components is dominated by Chinese companies due to their competitive pricing. A surge in imports led the National Democratic Alliance (NDA) government in its previous term to impose a safeguard duty from 30 July 2018 on solar cells and modules imported from China and Malaysia. This duty will expire in July.

India, the world’s third-largest energy consumer after the US and China, has a manufacturing capacity of 3 gigawatts (GW) for solar cells and imported $2.16 billion worth of solar photovoltaic cells, panels, and modules in 2018-19.

Anand Kumar, secretary, ministry of new and renewable energy, said the step would boost local manufacturing as part of the government’s Make in India strategy and protect local companies from cheaper imports.

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