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India Advised Against Levying Import Duty On Solar Cells & Modules

The Indian government has been advised by multiple entities not to levy import duties on solar cells and modules.

The Indian government has been advised by multiple entities not to levy import duties on solar cells and modules.

While the Chinese government was the first to caution India against levying anti-dumping or safeguard duties on imported solar cells and modules, the new advice is from more friendly quarters.

The European Investment Bank President Werner Hoyer recently stated that India should avoid implementing a proposed safeguard duty as it could be detrimental to India’s own renewable energy market. 

The EIB President was in India recently to attend the first summit of the International Solar Alliance in New Delhi. EIB offered debt funding worth €500 million for Indian solar power projects during Hoyer’s visit.

India is currently investigating levying anti-dumping and safeguard duties on imported solar cells and modules. The Directorate General of Safeguards had recommended levying a 70% safeguard duty on solar cells imported from China and Malaysia for a period of 200 days while it completes an investigation into a complaint filed by the Indian Solar Manufacturers Association. 

The ISMA is reportedly preparing to file a fresh application into the matter pushing the authorities to extend the period of investigation, which could possibly lead to a higher rate of duty, and possibly for a longer period of time.

Earlier last year, the Indian government also initiated an investigation into imported solar modules. Details on the status of this investigation remain elusive. Imported modules constitute around 90% of the solar modules installed in India.

Apart from the EIB, a panel of the Indian Parliament also advised the government against any import duties on solar cells. The Parliamentary Standing Committee on Energy not only voiced concerns over the high safeguard duty on imported solar cells, but also questioned the imposition of customs duty on imported solar modules which the developers oppose but are being forced to pay. The panel members also asked the Ministry of New and Renewable Energy to resolve the confusion over Goods and Services Tax (GST).

There is no doubt that the Indian solar market would suffer considerably if high duties are imposed on imports. India has seen a massive collapse in solar power tariffs over the last few years, and the drop has been in conjugation with the fall in prices and increased use of imported modules and cells. The parliamentary panel is right to point out that high duties could severely impact investments in India’s solar market.

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