India to arrange solar manufacturing zones; impose 15-20% responsibility to discourage imports from China

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The BCD would be over and above the safeguard duty extended for another year till July, 2021 in a bid to tighten screw on China and protect domestic manufacturing

KEY HIGHLIGHTS

  • State ports have identified 6-7 locations for the establishment of solar production zones
  • The Ministry of New and Renewable Energy has proposed an additional 15-20% tariff on solar panels to encourage local production
  • The Union Minister for Energy, New and Renewable Energy RK Singh says that the protective tariff is temporary and therefore he prefers the basic customs value
  • India imports over 80% of its solar systems, mainly from China

The Ministry of New and Renewable Energies, in consultation with the Ministry of Shipping, has circled 6-7 parcels of land in the large ports in order to set up production units for the local manufacture of solar systems. Production units closer to the seaport will help reduce logistics costs and enable export shipments to be shipped quickly.

“We’re thinking about bringing out production zones. We discussed the plan with the Department of Shipping and asked them to identify parcels of land near ports, ”Union Minister for Energy, New and Renewable Energy RK Singh told BusinessToday.In in an exclusive interview. Regarding the choice of locations, the minister said: “One reason is the availability of land, and if you then have to import raw materials, the logistics costs are lower. 6-7 locations are being considered. ”

The Ministry of New and Renewable Energy has also spoken out in favor of imposing a base tariff (BCD) of 15-20% on solar modules, solar cells and solar inverters and has written to the Ministry of Finance and proposed this. The BCD would go beyond the protection obligation, which was extended by another year until July 2021, in order to tighten the screw against China and to protect domestic production.

“This plan remains in place. We wrote to you (Treasury) that (basic) tariffs can be levied on solar systems. Protective tariffs are temporary. We said that we would prefer tariffs that are permanent. It is not like with Protective tariff that is there for a certain period of time. We also suggested the trajectory to them. Hopefully it should come, “said the energy minister.

In its announcement of July 29, the Ministry of Finance announced a tariff of 14.90% from July 30, 2020 to January 29, 2021 and 14.50% from January 30, 2021 to July 29, 2021 for all imported solar cells and modules from China, Thailand and Vietnam.

While India has been the fastest in the world to add renewable energy capacity, the majority of which is solar, it continues to import over 80% of solar equipment, especially from China. It now wants to reduce this import by building up domestic capacities. It has introduced tariff and non-tariff barriers to trade to curb imports.

After the border tension with China, the government has paid more attention to reducing the import of solar systems from the neighboring country. Indian solar companies imported $ 1,179 million worth of equipment from China from April to December of FY20.

The government has set a goal of building 175 GW of renewable energy capacity in the country by 2022, including 100 GW of grid-connected solar power. As of December 2019, a cumulative grid-connected capacity of 34 GW was installed in the country.

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