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India to Impose 40% Heavy Solar Duty on Modules Starting from April 2022

published: 2021-03-25 9:30

The ratio of imported solar remains obstinately high for India, and the government is highly concerned about the progress in the local industry chain; thus, it decided to implement heavy duty to provide assistance for the local industry. The Government of India recently announced that the highest duty for imported solar panels will be 40% starting from April 2022, and the particular motion has already been approved by the Ministry of Finance.

As the third largest country in the emission of greenhouse gas in the world, India is heavily dependent on coal-fired power generation, which occupies more than 80%, though the country is also adhering to an ambitious green energy target, and claims to increase the installed capacity of renewable energy to 500GW by 2030 that equals an elevation to 40%. Having marched towards the path of energy transformation, the analysis of IEA pointed out that India had a higher level of investment in solar over all fossil fuels during 2018, where green electricity is no longer exorbitant through extensive solar bid auctions, and the country had installed 89GW of renewable energy in 2019 while currently striving for the 175GW target of 2022.

Localization of related industries has also become the center of focus in order to achieve the ambitious targets and establish a sustainable industry environment. India currently has 80% of solar equipment from China, and the result from imposing the safeguard duty on solar cells and modules imported from China, Malaysia, Vietnam, and Thailand since July 30th 2018 has been unsatisfactory. The safeguard duty had also expired at the end of July 2020.  

The Government of India had decided to extend the safeguard duty for another year after considering the solar industry status of the country by imposing 14.9% of safeguard duty between July 30th 2020 and January 28th 2021, and the figure will reduce to 14.5% after July 29th. The duty for 2022 has also been finalized amidst the debate.

The Ministry of New and Renewable Energy (MNRE) pointed out in its official announcement that all imported solar panels will come with a 40% duty starting from April 2022, while solar cells will come with a 25% duty. The particular motion has been approved by the Ministry of Finance, and a customs notice will be published afterwards. By adhering to the grandfather clause, tenders that have completed are exempted from the duty.

Although duty polity is able to propel the progress of research, development, and deployment, as well as expedite on the goal of “Made in India”, and expand on technology of green electricity such as local solar equipment, lithium batteries, and electric vehicle charging stations, it is still uncertain if it will help with the targets of energy policy.

Pinaki Bhattacharyya, MD and CEO of Amp Energy India, commented that the duty will increase the cost for solar manufacturers and developers, followed by a surge in the cost of energy, thus decelerating the 175GW target for 2022.

Furthermore, the COVID-19 pandemic had drastically depleted the installed capacity of solar for India during 2020. According to the data of Mercom India, 2020 saw a mere 3,239MW of installed solar capacity, which was a YoY reduction of 56%.

 (Cover photo source: Unsplash)

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