Solar power firms rush to complete projects before duty hike

MUMBAI : Solar power producers are staring at a sharp escalation in costs of projects under construction if they fail to complete them before the government imposes a basic customs duty (BCD) on imported solar photovoltaic cells and modules from next year.

The BCD will come into force on 1 April 2022 after the expiry of the existing safeguard duty on such imports. This is expected to give domestic manufacturers the much-needed confidence to invest in expanding capacity. Power producers will, however, be forced to rush to finish projects within deadlines with imported equipment to keep costs under control and their projects viable, industry watchers said.

The ministry for new and renewable energy (MNRE) on 9 March announced a 40% BCD on solar modules and a 25% BCD on solar cells. The ministry said it wants local companies to not only produce enough to meet domestic demand for solar cells and modules but also become a key global supplier. The customs duty will replace a 14.5% safeguard duty currently imposed on imports from China and Malaysia.