To further protect the interest of domestic module manufacturing companies, the Indian government has imposed fresh import duties on solar cells and modules.
The Minister of New and Renewable Energy recently announced the imposition of a basic customs duty on solar cells and modules. Solar cells imported into India will attract a 20% duty while a 40% duty will be levied on imported modules. These duties will be imposed starting 1 April 2022.
The move is seen as yet another attempt by the Indian government to protect and promote Indian solar cell and module manufacturing companies. The Indian solar power market is dominated by Chinese companies that supply 80-90% of solar modules.
There have been numerous attempts by domestic manufacturers to get the government to levy import duties on Chinese modules. Some of these have been successful, the most recent being the levy of 14.8% safeguard duty.
Imposition of customs duty of a major demand by manufacturers for a long time as they wanted a level playing field with the Chinese companies. However, the military skirmishes between last year triggered a wave of anti-Chinese sentiment in India. The Indian government launched a massive programme to promote domestic manufacturing in several sectors with a goal to achieve self-sufficiency, solar equipment being one of those sectors.
Industry watchers see an immediate increase in tariff bids by project developers. Rating agencies and industry watchers expect an increase of 20-25% in tariff bids in upcoming auctions.