India To Change Solar Bid Rules To Address Possible Import Duties

Just days after two Indian states were forced to postpone solar power auctions for 2.2 gigawatts of capacity, the federal government has given new assurances that would allay some concerns of the developers. 

Minster of New and Renewable Energy RK Singh has clarified that bid rules would soon be modified in order to allow pass through of duties imposed in the future in tariffs discovered in auctions. Developers would receive increased tariffs if duties are imposed on solar power equipment following completion of auctions. 

Developers had submitted bids to install just a couple of hundred megawatts each in the two tenders of 2.2 gigawatts launched by Maharashtra and Karnataka. The main concern among developers was the confusion over implementation of a 70% safeguard duty on imported solar cells. Over 90% of the solar modules used in in India projects are imported, creating a major problem for Indian manufacturers.

While India’s Directorate General of Safeguards Customs and Central Excise has already  recommended  a provisional 70% safeguard duty on imported solar cells, a Parliamentary panel has said that there is no case to impose such a duty. Indian developers are currently paying 7.5% import duty on solar equipment and are very likely to have been taking that into account while placing bids for projects. A 70% duty, however, changes the ballgame completely, and that too when its imposition is not certain.

Indian authorities are also investigating whether or not to impose anti-dumping duties on imported solar modules.

The Ministry of New and Renewable Energy can make changes to the tender documents directly for federal-level auctions and can issue an advisory for states to follow suit in their respective auctions. At present, Indian laws allow a revision in tariffs only if taxes are changed, not duties. RK Singh has promised to make appropriate changes to tender documents swiftly to address concerns of developers.