Renewable energy ministry proposes basic customs duty on solar equipment from Aug: R K Singh

Power and New & Renewable Energy Minister R K Singh on Tuesday said his ministry has proposed to impose basic customs duty (BCD) on solar cells, modules and inverters from August.

Singh informed stakeholders about the proposal during a deliberation through video-conferencing with industry associations to discuss ways and means to ensure the success of the Atmanirbhar Bharat Abhiyan and the Make in India initiative on Tuesday.

"The Union minister further informed the meeting of the ministry's proposal to impose basic customs duty (BCD) beginning August 2020 on solar modules, solar cells and solar inverters," the power ministry said in a statement.

The minister, quoted in the statement, said that a clear trajectory of BCD would be declared so that there is no uncertainty about the government policy.

He further said the practice of issuing concessional custom certificates for certain import items in the renewable energy (RE) sector will be discontinued from a date that will be specified separately.

Currently, there is no BCD on solar equipment.

However, a 15 per cent safeguard duty (SGD) is applicable on solar cells that would be zero or nil from July 30, 2020.

In July 2018, India imposed SGD on solar cells imports from China and Malaysia for two years to protect domestic players from steep rise in the inbound shipments of the products.

The government had imposed a 25 per cent SGD for July 30 2018, to July 29, 2019, which gradually came down to 20 per cent during July 30, 2019, to January 29, 2020, and 15 per cent during January 30, 2020 to July 29, 2020.

Further, the minister said the approved list of models and manufacturers in respect of renewable energy will be made effective from October 1, 2020, as declared earlier.

This will ensure that all solar power projects that are bid out as per the standard bidding guidelines will be required to procure solar cells and solar modules and other equipment from manufacturers figuring in the approved list.

In addition, he said financing from Power Finance Corporation (PFC), REC Ltd and Indian Renewable Energy Development Agency (IREDA) will be structured in such a manner that lower rates of interest will be charged on the developers who will use domestically manufactured equipments.

The minister said that from the data on item-wise quantum of imports in power sector given by DGCI (Directorate General of Commercial Intelligence), it is seen that many equipment like transmission line towers, conductors, industrial electronics, capacitors, transformers, cables and insulators and fittings, in respect of which domestic manufacturing capacity exists, are still being imported.

The minister pointed out that power is a sensitive and strategically important sector, as all our communications, manufacturing, data management and all essential services depend on power supply and any malware may bring down the system.

He also urged all energy developers to take the pledge to not import any equipment, materials or goods that are sufficiently available domestically.

Also, in respect of goods and services wherein domestic capacity is not available and that import is inevitable then it should be allowed only for a fixed timeframe of 2-3 years, he said.

Singh also added that during the 2-3 years, indigenous manufacturing of these items would be developed by an enabling policy, tax incentives, start-ups, vendor development and R&D support.

In respect of equipment required to be imported, the import of such items from prior reference countries shall be done only after obtaining prior approval of the Ministry of Power and MNRE, he added.