Central government to help domestic solar industry after sharp duty hike

The Centre may soon announce several incentives for the domestic solar industry to ease the pressure due to high import duties on solar modules and cells. It will, however, not be in the form of tax cuts, a report in Mint stated.

The government may provide direct incentives to the producers of solar modules as it believes that tax cuts may lead to practical difficulties. Also, it may set a precedent for more sectors asking for tax breaks, the report added.

The government announced a 40 per cent basic customs duty (BCD) on solar modules in 2021 and 25 per cent BCD on solar cells. These came into effect on April 1, 2022. A social welfare surcharge was also levied on the modules, taking the total to 44 per cent. It was primarily aimed at discouraging imports from China.