India May Permanently Impose An Import Duty On Solar Panels

Import Duties On Solar Panels in India

The recent fracas between the customs department and the ministry of new and renewable energy (MNRE) may result in an unexpected negative surprise for the solar development community.

The customs department had reclassified solar panels in a different customs code which resulted in a 10% overall duty on the solar panels. Currently solar panels import in India has 0% duty and this has been the case for many years. This led to a lot of heartburn for solar developers resulting in huge containers of solar panels being stuck in ports as ACME even went to court to get this resolved. MNRE also wrote to the finance ministry to rectify this situation as most solar projects have been bid and developed based on wafer-thin margins. A similar situation resulted a year ago and had been quickly resolved. However, this time there is a strong likelihood that solar panels may be stuck in the classification code where they would have to permanently pay customs duties.

Also, read ADD, GST and PPAs – The Three Antiheroes Of Indian Solar Industry In 2017

The finance ministry is of the view that solar panel should have import duties because the government is anyway thinking of imposing some kind of anti-dumping or safeguard duties on solar panel imports to protect the domestic manufacturers who are facing existential issues due to massive imports of cheap panels. With solar power in the country already touching very low levels, the government does not think it has to be supported too much through exemptions and subsidies. Solar power seems to be in a state where it can support itself without subsidies or import duty exemptions.

The government may decide to exempt solar developers who have already won tenders from this duty as they would not have factored in the increased cost of the import duty but for future solar development, import duties might become a permanent feature.