While the decision to impose basic tariffs on solar systems is likely to spur domestic manufacturing, this move may be counterproductive for manufacturers who have set up facilities in special economic zones unless they are assimilated to units in the domestic tariff zones, so say the industry players.
The Minister of Energy and New and Renewable Energy, RK Singh, said Thursday that his ministry had proposed imposing a 15 to 20 percent base tariff on solar systems, including cells, modules and inverters, from August 1 of this year in the first Year that would eventually rise to 40 percent.
According to the data available with MNRE, 63 percent or almost 2000 MW of the total 3100 MW cell production capacity and almost 43 percent or around 3800 MW of the 9000 MW module production capacity are currently in the SEZ.
"In general, the introduction of BCD is a welcome move in the context that the time has come to focus on domestic manufacturing, which would help save significant foreign exchange and generate at least 3% over the next 2-3 years. To create 4 lakh jobs in this sector. " However, this measure would be counterproductive and would harm the industry if it is not ensured that units in DTA and SEZ are placed on a similar basis with regard to duties and taxes, "Saibaba Vutukuri, CEO of Vikram Solar, told PTI.
In July 2018, India imposed protective measures on solar cell imports from China and Malaysia for two years to protect domestic players from a surge in inbound shipments of the products. The government had imposed an SGD of 25 percent that gradually declined over the years and would be zero or zero as of July 30, 2020.
However, since the protective levy was applicable in the SEZ and in export-oriented units, the manufacturers of solar systems in these units had to pay the levy for the modules and cells they manufactured and used for solar projects in India.
"In addition to China, Malaysia and other countries, India is also an important market for solar cells and modules for Indian companies, regardless of whether they are located in SEZ, in export-oriented units or in DTA zones. When investing in the production units in India A tariff was never provided for SEZ to be released to DTA. It is therefore important to protect existing investments, especially in SEZ, "said RenewSys Global CEO and MD Avinash Hiranandani.
The ministry has proposed imposing 20 to 25 percent BCD on solar panels, which should be increased to 40 percent later in the second year. For cells, the tariff would be in the range of 15 to 20 percent in the first year and increased to 40 percent in the second year.
Webel Solar's executive director, SL Agarwal, reiterated the view: "If the production units in DTA and SEZ are put on a similar footing in terms of duties and taxes, it will help India meet its renewable energy targets and the government help with." In addition, the production units located in the SEZ could export and serve the domestic market, which would generate economies of scale.
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