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India is set to introduce a 40% and 25% customs duty for any solar module and solar cell imported into the country from next year.
- Some believe that the new customs duty would raise project and energy costs in the country.
- India plans to install a total of 450 GW of clean energy over the next ten years.
India’s finance ministry has approved a proposal to introduce increased customs duty for any solar module (40%) and solar cell (25%) import by April 2022. The policy would not affect projects which have already been tendered and agreed to by the Ministry of Finance. The current customs levy on imported solar cells is 14.5%, intended to safeguard local manufacturers against imports from China, Vietnam, and Thailand, is set to expire by July 30.
This move is opposed by some in the country who believe that the new customs duty would raise domestic solar manufacturers’ costs, increasing project costs and energy costs. Pinaki Bhattacharyya, chief executive and MD of the Indian division of Canadian solar developer Amp Energy Group believe that the move will slow down the race towards India’s 2022 target of generating 175 GW from solar energy. Bhattacharyya believes direct manufacturing subsidies to manufacturers will be more beneficial in helping them to scale capacity.
Read also: India Added 5.2GW of New Solar Capacity Between April and November 2020
The Indian government is looking to shore up domestic production as the global supply chain disruption resulted in a slump in project development over the past year. It is expected that the customs duties will help domestic manufacturers compete with regional rivals and avoid a repeat of the disruption in the future.
India has lofty clean energy targets; the country intends to install 100 GW of solar capacity by 2022. It also plans to install a total of 450 GW of clean energy over the next ten years. To achieve this, the country will have to add around 25 GW of new solar yearly.