India is reportedly considering lapsing the safeguard duty on import of solar cells and modules from China and Malaysia. The current provision has been in place in July 30, 2018 and expires on July 29.
Once this safeguard is removed, these items would be much more expensive to import. It would add a significant expense to projects as modules alone comprise 60 percent of total cost.
“The Centre will take soon take a call on when basic customs duty (BCD) on these products will be imposed,” sources told Mint.
Moneycontrol could not independently verify the report.
While this is likely a fallout of the India-China border clashes in Ladakh, the report added it also indicates India’s determination to attract investors who are keen to dilute interests in China after the coronavirus pandemic exposed dangers of overdependence on a single large source.
Budget 2020 had imposed 20 percent customs duty on solar cells and modules, and import of other renewable energy equipment from none before.
A senior government official told the paper that while the Budget had not set a date for BCD, it is likely to come in as soon as the safeguard duty drops. “The rates and trajectory of the BCD is yet to be finalised. We are of the view that the safeguard duty shall not be extended. An announcement to this effect may be made shortly,” he added.
The paper added that Ministry of New and Renewable Energy was earlier in favour of imposing BCD from April 1, 2021. The move comes as calls for expansion of domestic manufacturing capabilities have increased as India moves to expand solar in its energy mix. Solar power already accounts for 20 percent of India’s installed power generation capacity.