India considers 7.5% duty on imported solar modules

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The Indian Government is mulling a 7.5% tax on imported solar PV modules, according to Bloomberg, which cites government officials. Reportedly, India has bought a third of China’s $8 billion of shipments from January through to September 2017.

Domestic manufacturers are said to have suffered as a result, leading to government plans for manufacturing policies and reforms.

The Indian solar sector depends heavily on imported solar modules, with around 89% coming from outside the country, of which 85% alone comes from China. Such imports are currently not taxed, however, there is a possibility they will be reclassified as motors, which are subject to import tariffs.

The Finance Ministry is said to be considering the Ministry of New and Renewable Energy (MNRE’s) request to tax imported panels. The tax will be levied on upcoming auctions, and not on the already awarded projects.

Domestic requirements

India recently unveiled a $1.7 billion solar manufacturing scheme draft to boost its domestic sector and is also planning to impose duties on solar cells.

These changes, if implemented, will come as blow to project developers, who are bidding low. Higher global module costs have already increased bid rates from record lows in auctions conducted by SECI late last year, and the import tax could increase the prices further, according to Bloomberg New Energy Finance.

“Power producers need not panic immediately but they will still be nervous till a final notification comes from the finance ministry exempting import duties on projects that have already been auctioned,” said New Delhi-based BNEF India research head Shantanu Jaiswal.

According to Bloomberg, last year around 900 containers of solar modules were held up at ports by custom officials, which delayed several projects and created losses for developers. However, MNRE minister RK Singh has updated the status of the imported panels held at customs and introduced measures to avoid any charges.