MNRE For Customs Duty On Imported PV Cells & Modules

• MNRE has written to the Finance ministry to impose basic customs duty (BCD) on imported solar cells and modules
• It will be imposed using phased approach from April 1, 2021, finally settling at 30% for modules as well as solar PV cells each from January 1, 2023 onwards
• For now, wafers, EVA, glass, silver paste, aluminium frames, structures and other raw materials used for manufacturing of solar PV cells and modules can be kept out of the purview of the BCD, but post December 31, 2023, MNRE wants 15% customs duty to be levied on all thing used to manufacture solar cells and modules
• Such a step will help the domestic manufacturing industry under Make in India program, according to the MNRE

India's Ministry of New and Renewable Energy (MNRE) head RK Singh has recommended the Ministry of Finance (MoF) to bring imported solar cells and modules under Basic Customs Duty (BCD) in order to give another boost to domestic manufacturing industry under Make in India program.

In a letter sent by Singh, BCD is proposed to be imposed in a phased manner starting with 10% for solar PV cells and modules from April 1, 2021 till December 31, 2021. It will be increased to 20% for solar modules and 15% for cells from January 1, 2022 till December 31, 2022. Finally, it be scaled up to 30% for both modules and cells each from January 1, 2023 onwards.

Blaming 'cheap import' of solar PV modules/panels in large quantities' as one of  the 'major impediments' to the growth of domestic solar PV manufacturing industry in the absence of BCD. In the same letter, Singh proposed to do without duties for wafers, EVA, glass, silver paste, aluminium frames, structures and other raw materials used for manufacturing of solar PV cells and modules till December 31, 2023.

Post that, he recommends 15% customs duty on all items used in manufacture of solar cells and modules.

According to the letter, as per the Information Technology Agreement (ITA-I) signed by India in 19196, BCD was till now used for products and equipment in the information technology field, however, MNRE says solar products used to produce solar power should be made to pay BCD. It also suggests bringing solar PV cells and modules/panels under two different customs tariff heads—solar PV cells and solar PV modules/panels—to provide differential import duties and differential duty trajectory for both the categories.

In 2018, the Indian government imposed safeguard duties on solar cells imported from China and Malaysia, also in a phased down manner (see 25% Safeguard Duty Imposed By India).

Post the imposition of the safeguard duty, the share of Chinese imports in India reduced from 91.5% in Q1/2018 to around 80% in Q1/2019 while cumulative solar imports to India declined 40% YoY. Domestic manufacturers were able to improve their solar exports by 74% annually, according to Mercom India Research's India Solar EXIM Tracker (see India's Solar Imports Decline, Exports Increase In Q1).