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India to set up solar manufacturing zones; impose 15-20% duty to discourage imports from China

Nirbhay Kumar     August 17, 2020


  • State-run ports have identified 6-7 locations for setting up solar manufacturing zones
  • Ministry of New and Renewable Energy has proposed additional duty of 15-20% on solar equipment to promote local manufacturing
  • Union Minister of Power, New and Renewable Energy RK Singh says safeguard duty is temporary and hence he prefers basic custom duty
  • India imports over 80% of solar equipment especially from China

Ministry of New and Renewable Energy, in consultation with Shipping Ministry, has zeroed in on 6-7 land parcels across major ports to set up production units for local manufacturing of solar equipment. Production units closer to seaports will help reduce logistics costs and make swift shipping of export consignments possible.

"We are thinking of coming out with manufacturing zones. We had discussed the plan with Ministry of Shipping and requested to identify land parcels near ports," Union Minister of Power, New and Renewable Energy RK Singh told BusinessToday.In in an exclusive interview. On choice of locations, the Minister said, "One reason is availability of land and then if you have to import some raw material, logistics cost will be less. There are 6-7 locations under consideration."

The Ministry of New and Renewable Energy has also pitched for levying basic custom duty (BCD) of 15-20% on solar modules, solar cells and solar inverters, and written to Finance Ministry proposing the same. The BCD would be over and above the safeguard duty extended for another year till July, 2021 in a bid to tighten screw on China and protect domestic manufacturing.

"That plan stays. We have written to them (Finance Ministry) that (basic) custom duty may be imposed on solar equipment. Safeguard duty is temporary. We said that we would prefer customs, which is permanent feature. It's not like safeguard duty which is there for a particular period. We have also suggested them the trajectory. Hopefully, it should come," the Power Minister said.

The Department of Revenue in its notification on July 29 announced a duty of 14.90% from July 30, 2020, to January 29, 2021, and 14.50% from January 30, 2021, to July 29, 2021, for all solar cells and modules imported from China, Thailand, and Vietnam.

While India has added renewable energy capacity, bulk of which is solar, at fastest pace in the world, it continues to import over 80% of the solar equipment, especially from China. It now wants to slash this import by building domestic capability. It has put in place tariff and non-tariff barriers to contain imports.  

Following border tensions with China, the government has laid more emphasis on cutting solar equipment import from the neighbouring country. Indian solar power firms imported equipment worth $1,179 million from China during April-December of FY20.

The government has set a target of setting up 175GW of renewable energy capacity in the country by 2022 of which grid-connected solar power would be 100GW. A cumulative grid connected capacity of 34 GW has been installed in the country as on December, 2019.

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