By Vinay Kumar P
In choosing to increase the tariff rate on solar cells and modules to 20% in this budget, India could be in breach of the Information Technology Agreement (ITA). We may expect pushback at the WTO from other ITA member countries.
By now there is some consensus that the Budget does not change the import tariff structure for solar cells and panels, in the immediate future – at least until Safeguard Duty (SGD) lapses. So Safeguard duty continues at 15%, BCD is NIL and IGST is at 5% .
The fine print, however, is the removal of the exemption from Social Welfare Surcharge (SWS) on solar cells and modules. SWS was introduced in Budget 2018 and was pegged at 10% of all duties of customs except SGD, CVD and ADD. SWS was however exempted for cells and modules since inception. Now with the exemption removed, SWS of 10% will apply on the IGST portion of 5% . SWS is not applied on SGD.
This will increase the effective rate of duty on imported modules from 20.75% to 21.33% in the immediate aftermath of Budget.