A question mark has arisen over the trajectory of falling solar tariffs in India since the Centre announced its decision to levy from FY23 basic customs duty (BCD) of 40% and 25%, on import of solar modules and cells, respectively. Given that modules account for about 60% of the total project expenditure in solar plants, the use of Indian products in place of the cheaper Chinese modules by project developers is expected to lead to a rise in solar tariffs, experts say.
While domestic modules are currently priced in the range of 29-30 cents per watt-peak (c/wp), modules imported from China come for 23-24 c/wp. In fact, the substantial solar capacity addition India has seen in recent years has materialised through the use of foreign products, especially from China. The government has now ruled that all projects bid out after April 10 under central government schemes will have to source solar equipment from entities that are a part of the approved list of models and manufacturers (ALMM). No foreign module manufacturers have made it to ALMM for now.
