The Ministry of New and Renewable Energy (MNRE) has imposed basic customs duty (BCD) on imported solar cells and modules which will come into effect starting April 1, 2022.
The ministry has imposed 40 % BCD on solar modules with HSN Code 85414012 and 25% on solar cells (85414011).
Presently, India’s solar sector, just like in any other country of the world, is heavily reliant on imports of solar equipment. Government have also noted instances of certain countries dumping solar cells and modules to kill the nascent domestic industry, because of which Government had to impose Safeguard Duties.
COVID-19 pandemic brought disruptions in international trade including imports of solar modules and solar cells affecting solar capacity additions in the country. Considering India’s huge solar targets and that electricity is a strategic sector of the economy, India needs to develop domestic solar manufacturing capacities and reduce its dependence on imports to avoid disruption in future.The announcement to impose BCD on solar cells and modules does not allow grandfathering of projects already auctioned. The directive has also received the consent of the Ministry of Finance.
The ministry has also directed all implementing agencies and stakeholders to make a note of the announcement and include it in the tender documents. Bidders are cautioned to take the BCD into account while quoting tariffs in all future bids where the last date of bid submission falls after this notification.
The ministry noted that the Atmanirbhar Bharat initiative has geared up the country toward scaling up domestic manufacturing. Scaling up of domestic solar manufacturing would also enable India to export solar cells/modules. This would also provide other countries an alternative avenue for procuring solar cells/modules.
The proposal of MNRE to impose BCD on solar cells and modules (without grandfathering of bid out projects) has been agreed to by the Ministry of Finance.
MNRE has directed all implementing agencies and stakeholders to make a note of the announcement and include it in the tender documents.
Bidders are cautioned to take the BCD into account while quoting tariffs in all future bids where the last date of bid submission falls after this notification.