Economy

Solar manufacturers not satisfied with proposed basic customs duty

M Ramesh Chennai | Updated on July 04, 2020 Published on July 04, 2020

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Indian manufacturers of solar modules and cells are not satisfied with the proposed basic customs duties. They have demanded more protection, funding for technological upgradation, capital subsidy for setting up manufacturing units and concessional interest rates.

This came across in a webinar on the impact of the impending imposition of basic customs duty (BCD) on imported solar modules and cells (cells are assembled to make modules). The government proposes to bring in 20-25 per cent BCD on imported modules, increasing it to 40 per cent next year; for cells it will be 15 per cent in the first year, and 30 per cent next year.

Speaking at the webinar, which was organised by the consultancy JMK Research and Analytics, Hitesh Doshi, Chairman and Managing Director, Waaree, a solar module manufacturer, said that 25 per cent BDC is “not enough”. He noted that since Chinese modules sell today at 18 US cents a Watt-peak, 25 per cent duty would translate to only 4.5 cents. Doshi observed that Indian manufacturers, who import various components, such as EVA that is used in making modules, need to pay BCD on those items.

In a conversation with BusinessLine a few days back, Doshi had said the BCD on imported modules should be at least 50 per cent.

Later, it was pointed out by Ramesh Nair, CEO of Adani Solar, another leading solar module manufacturer, that once India had more than 100 per cent duty on imported cars because of which many car manufacturers set up plants in the country. Doshi also pointed out that seven years ago, the government had proposed a 70 per cent safeguard duty on modules imported from China and a few other countries. (Later, the government brought down the safeguard duty to 25 per cent for the first year, 20 and 15 per cent for the subsequent two half-years — which will come to an end on July 31.)

Nair said the industry also needed 25 per cent capital subsidy, which he said, the government was giving (under the M-SIPS scheme). However, he said that since solar module technology “keeps changing every two or three years”, the industry should be given “some sort of a technology upgradation fund”. This is to enable the industry to “keep upgrading their technology”.

(A similar demand has been made by other manufacturers too, who were not in the webinar, such as Narendra Surana, Chairman of Surana Solar, a Hyderabad-based solar module manufacturer.)

Furthermore, Nair wanted interest subvention, or concessional rate of interest, because there is a huge difference between interest rates in China and India.

He also wanted the BCD to live on for 10 years, so that there is “stability” in policy.

The proposed customs duties apply to cells and modules purchased from units located in the country’s various Special Economic Zones (SEZs), where the units pay no duty on imported machinery or raw material. However, Nair (and indeed the entire industry) is up in arms against BCD on products purchased from units in SEZs. They should be exempt from the BCD, Nair said. Otherwise, units in the SEZs will be at a disadvantage vis-a-vis those outside.

“60 per cent of India’s cell capacity (about 3 GW) is sitting inside SEZs,” Nair said.

Parag Sharma, CEO, O2 Power, a renewable energy company, said that only a BCD of at least 40 per cent will make solar developers look at buying from India. He also said that duty protection would be needed for several years so as to give investors confidence that they would be sufficiently protected against cheap imports.

However, Sharma stressed that Indian module manufactures should ensure that they give products of good quality. Responding to this, Doshi said that it was only a matter of perception that Indian manufacturers were not up to the mark in quality. Agreeing with him, Nair said that Adani Solar had exported 400 MW of modules to the US.

Data from the Commerce Ministry show that India’s exports of solar cells and modules nearly doubled to ₹1,506 crore, compared with ₹847 crore in the previous year.

India’s import of solar modules and cells

 

 

 

YearImports in ₹ crSolar capacity installed in GW

2017-18

24,720

9.6

2018-19

15,105

6.5

2019-20 (provisional)

11,839

6.4

 

China is the biggest supplier of cells and modules to India. In the last four years, India imported modules and cells worth ₹72,800 crore from China.

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Published on July 04, 2020
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