Solar power producers are anticipating a significant increase in the cost of construction projects 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 effect on 1 April 2022 after the expiry of the existing defense duty on imported goods. This is expected to give local producers much-needed confidence to invest in energy efficiency. Electricity producers will be forced to rush to complete the projects within the allotted time with imported equipment to keep costs under control and their projects working, industry watchdogs said.

The Ministry of New and Renewable Energy (MNRE) 9 March announced 40% BCD in solar modules and 25% BCD in solar cells. The department said it wanted local companies to not only produce enough to meet the domestic needs of solar cells and modules but also to be a leading global supplier. Customs tax will replace the 14.5% defense duty currently provided for imports from China and Malaysia.

On March 12, MNRE re-released the list of models and module manufacturers for government projects and created a barrier that does not charge a minimum import fee.
India is building about 3.6 gigawatts (GW) of auxiliary power and pumpkin roof in 2020 and 6.5GW in 2019. About 90% of the cells and modules used in these operations are imported, and China makes up most of the materials used.

India is expected to add 13.5GW of power this year, most of which are short-term projects due to covid-related construction constraints. These engineers are expected to install equipment to complete the projects before the BCD enters.

“BCD will deliver solar benefits (in addition to renewable ones) in the short term,” said Vinay Rustagi, executive director, Bridge to India. “The increase will have a negative impact on demand, especially as distribution companies are already reluctant to buy solar panels. of 11 March that BCD will increase the cost of solar power projects by 23-24%. Currently, home modules are 12-15% more expensive than imported ones.
“But the increase in capacity next year should be seen as developers (and end-users) prioritizing project implementation to avoid incurring BCD costs,” Rustagi said. “While most tenders now come with a standard change compensation process. The machine is inadequate and leaves developers out of pocket.”

Source: LiveMint