Reconsider BCD On Solar Cells & Modules, Says SPDA

Indian Solar Power Developers Want Government To Reconsider Basic Custom Duty Imposition On Solar Cells & Modules To Avoid Sector Slowdown
05:49 PM (Beijing Time) - 01. September 2020
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It would be unfair and counterproductive to have safeguard duties as well as BCD in place at the same time, said the Solar Power Developers Association (SPDA). This would put financial pressure even on already bid out projects that amount to around 50 GW capacity at present. (Photo Credit: TaiyangNews)

Key Takeaways

  • SPDA wants government to postpone the imposition of BCD on imported solar cells and modules by 18 months
  • Developers want the duty to be imposed on incremental imports, such as the part of modules uncatered by domestic manufacturers instead of imposing it on 100% of imports
  • They suggest government to issue more manufacturing linked solar power project tenders to boost domestic manufacturing
  • With safeguard duty in place another duty would severely slow down the Indian solar sector, they warn

The Indian government must reconsider its decision to impose basic custom duty (BCD) on imported solar cells and modules if it wishes to prevent a ‘severe slowdown’ in the achievement of its 100 GW solar power capacity plan scheduled to be realized by December 2022.This is what the Solar Power Developers Association (SPDA) has requested the government.

The lobby group want the administration to postpone the imposition by 18 months which would give enough time to developers to avoid the financial burden on already bid out projects. This capacity amounts to around 50 GW.

The Indian Ministry of New and Renewable Energy (MNRE) has proposed to impose 10% to 15% of BCD on imported solar cells and 20% to 25% and said it should be effective from August 1, 2020 (see MNRE Details Basic Custom Duty Proposal For Solar).

Additional tariff barriers at a time when safeguard duty has been extended on imported solar cells and modules by another year are expected to damage the sector’s prospects (see India Extends Safeguard Duty For Another Year).

“Imposing two duties simultaneously on one product is not only unfair but also counterproductive to achieving the target of 100 GW of Solar Power by 2022,” explained SPDA Director General Shekhar Dutt. “Consumers must benefit from affordable and clean power possible through Solar Energy – the imposition of duties and taxes would have a cascading effect on power costs and could adversely affect the health of DISCOMs.”

Simultaneous duties will push up costs for project development translating into higher tariffs across different end-users, and at the same time, increased tariffs would directly impact operating costs of manufacturing denting their competitiveness in the global market, the association argues. It warns of cartelization in the solar market if the BCD comes into force.

The developer community further believes that even if India has domestic solar cells and modules manufacturing capacity, it would still depend on imports for the upstream value chain comprising polysilicon, ingots and wafers that represent 30% to 35% of the total cost. Hence, it argues the policy should target indigenization of the entire value chain.

“Further, instead of making duty applicable to 100% of imports, options must be explored to tax only incremental imports, i.e., the quantum of modules uncatered by domestic manufacturers. This incremental capacity will taper down with an increase in domestic capacity. Additionally, more manufacturing linked tenders must be issued by the Government to give a boost to domestic manufacturing in India,” the developers demand.

The SPDA call comes soon after All India Solar Industries Association (AISIA) called on the government to impose at least 50% CD on solar equipment immediately for sustenance of domestic manufacturers and give further impetus to the government’s call for Atmanirbhar Bharat or a self-reliant India, reported Press Trust of India (PTI).

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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Anu Bhambhani