India to impose tariff barrier on solar cells, modules, inverters from 1 August

NDA government had imposed the safeguard duty on solar cells and modules imported from China and Malaysia on 30 July, 2018. (Photo: Bloomberg)

NEW DELHI: To make solar cells, modules and inverters imported from China expensive, India is expected to impose a basic tariff once the current protective tariff expires on July 29, two people aware of the development said.

The Ministry of New and Renewable Energies will soon write to the Ministry of Trade and Industry to impose this 20% tariff barrier on imports of green energy systems.

To ensure that projects already advertised and advertised electricity tariffs are not affected, the government plans to make such projects “grandfatherly” and is gathering details along with the tentative import date of the equipment.

Mint reported on Monday on India’s plan to take a call on the day the basic duty is collected.

On July 30, 2018, the government of the National Democratic Alliance (NDA) introduced mandatory protection for solar cells and modules imported from China and Malaysia.

“The basic tariff for solar cells, modules and inverters will be introduced shortly. The Ministry of New and Renewable Energy will write to the Commerce Department shortly to impose it once the protection obligation ends, “said a senior government official, asking for anonymity.

According to government documents examined by Mint, the Ministry of New and Renewable Energy was earlier in favor of introducing the tax from April 1, 2021.

However, the Union budget for 2020-21, presented by Finance Minister Nirmala Sitharaman earlier this year, approved a mechanism to raise tariffs on imports of green energy equipment, imposing a basic tariff of 20% on cells and modules.

It does so against the backdrop of India considering an economic response after 20 Indian soldiers were killed and at least 76 injured in the recent violent clash with Chinese forces along the border in Ladakh.

The fast growing domestic solar component market is dominated by Chinese companies because of its competitive prices. India imported solar photovoltaic cells, modules and modules worth $ 2.16 billion in 2018-19. The surge in imports had prompted the NDA government to impose protective tariffs in its previous tenure.

India currently has a domestic solar cell production capacity of 3 GW and recently won a manufacturing solar order that will help build additional solar cell and module production capacity.

Modules account for almost 60% of the total cost of a solar power project.

Clean energy projects now account for more than a fifth of the power generation capacity installed in India. With ambitious plans to expand capacity, the country is becoming one of the world’s leading producers of renewable energies.

This also follows the centre’s move to only allow manufacturers approved by the Bureau of Indian Standards and the Department of New and Renewable Energy to benefit from government-sponsored programs, including projects that use solar power distribution companies to use Procure supplies for their consumers.

India is also looking to play a bigger role in global supply chains amid the disruption caused by the coronavirus originating in Wuhan, China.

China remains India’s second largest trading partner after the USA. India’s exports to China rose 3.8% to $ 17.1 billion in 2019, while imports fell 7.5% to $ 68.3 billion in the same year. India’s growing bilateral trade deficit with China remains a concern.

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