Domestic solar manufacturers in a quandary over regulatory concerns, threat of survival looms

V Rishi Kumar Hyderabad | Updated on August 07, 2020

‘Equalization Levy’ key to Aatma Nirbhar Bharat’s success

The country’s domestic solar manufacturers are in a quandary over some regulatory concerns and have appealed to the government for its immediate intervention, including finalising Equalization Levy, which they feel is key to Atma Nirbhar Bharat mission in the sunrise sector.

Unless the anomaly is sorted out, all the manufacturing units located in special economic zones (SEZss) could become like Chinese companies having to take on not just non domestic companies but also imports from countries where India has Free Trade Agreements.

Top executives of solar manufacturers, including Renewsys, Vikram Solar, and Webel Solar on Friday shared their concerns and sought immediate attention and intervention of the Government to facilitate course correction by sorting out policy hurdles.

Unless this is done, we could end up in a situation where the dometci firms could head for closure and job losses, they said.

Saibaba Vutukuri, Chief Executive Office, Vikram Solar, said: “There was an apprehension that manufacturing units located in SEZ have availed certain benefits in past hence if Basic Custom Duty is not levied while clearing the products from SEZ to DTA (Domestic Tariff Area) it will put manufacturing units located in DTA at cost disadvantage.”

“In order to address this issue, the government is comprehending to levy ‘Equalization Levy’, whenever solar cell and modules manufacturing units located in SEZ clear their goods to DTA. Equalization levy will set off the benefits availed by manufacturing units located in SEZ while setting up the facilities,” he explained.

The company are backing the proposal for imposition of an Equalization Levy, as it will ensure that the manufacturing units located in DTA and SEZ are placed on similar footing in terms of custom duties.

“In the absence of a level playing field, domestic manufacturers in SEZs will have to shut shop and may see job losses in tune of 15,000 people,” he said.

Focus on domestic manufacturing

Avinash Hiranandani, Global CEO and Managing Director, RenewSys, said: “The solar industry is bleeding and we strongly recommend the government to immediately levy Basic Custom Duty on imports of cells and modules while levying Equalization Levy on manufacturing units located in SEZ. While India has been focussing on creating a market for solar power, now is the time to focus on domestic manufacturing, which would help conserve substantial foreign exchange and create at least 3,00,000 to 4,00,000 jobs in the next 2-3 years.”

With 63% cell manufacturing capacity and 43% module manufacturing facility located at the SEZs, solar manufacturers expressed that while BCD (basic customs duty) is a welcome move, the government must take necessary steps to protect the investments already made by the manufacturing facilities located in SEZ, hence ‘equalization levy’ was a fair solution.

SL Agarwal, Managing Director, Webel Solar, said: “It is no doubt that India has emerged as a strong market for solar power equipment in the last 5 years. With the government setting ambitious targets of 175 GW by year 2022, it is important to ensure a conducive policy environment in order to achieve it.”

By investing about $2-3 billion, India can avoid about $ 18 billion in Forex. The investments would be adequate to take care of the domestic requirement of about 18-20 Giga watts per annum and fully offset imports.

They said that several companies, including Vikram Solar, RenewSys, Websol among host of new entrants, are eyeing entry into the sector and policy tweaks would augur well for domestic manufacturing.

Published on August 07, 2020

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