Impact of domestic procurement and inspection on solar power project

Earlier, India’s Director-General of Trade Remedies (DGTR) recommended that the safeguard duties on imports, due to expire at the end of July, be extended for a further year. This would be levied at 14.9% for six months, falling to 14.5% for a further six months, whilst being expanded to include both Thailand and Vietnam. At present the safeguard duty stands at a flat 15% rate on imports just from China and Malaysia.

However the matter is complicated further by previously announced plans to implement a new Basic Customs Duty (BCD) on effective from August 2020. This would stand at between 20 – 25% for modules and 15% for solar cells, increasing to 40% and 30% respectively next year.

Such a hit would stand to significantly increase project costs, alter the trajectory for solar tariff rates in India and jeopardise project pipelines. The result could be a large number of project cancellations, with tariff rates becoming too low to cover project costs, rendering them financially unviable.

There are also concerns that the imposition of such duties would be “largely insufficient” in their aim of stimulating domestic manufacturing, given that the country still imports a substantial majority – around 80% – of solar equipment from manufacturers based in Malaysia and China.

AUTHOR

Hiten Parekh

Hiten Parekh

Chief Business Officer | SolarSquare Energy

Views expressed in this article are those of the author and do not necessarily reflect those of the editors or publishers.