In support of the domestic solar panel manufacturing industry, India has imposed a Basic Customs Duty on imported solar modules and cells in the country from 1st April 2022. As reported in various media releases, the plans to levy a basic customs duty of 40% on solar modules and 25% on solar cells is underway as mentioned by power and renewable energy minister Mr. Raj Kumar Singh.
The Backdrop of the Customs Duty
Over 80% of the solar modules used in solar projects in India are imported from foreign countries like China and Malaysia. The imposition is therefore said to be a part of the Atma Nirbhar Bharat strategy which seeks to increase the dependence of the industry on domestically manufactured solar modules and cells. Currently, there is a safeguard duty of 15% which is levied on such imports. The basic customs duty once in effect will replace the safeguard duty. The duty is being said to be implemented from 1st April 2022.
Greenergee’s Take: How will the imposition of the duty impact you as a power consumer?
The Basic Customs Duty, even though being said to be implemented with the objective to build a sustainable solar manufacturing industry in the country, might not have a very favorable short-term impact on the power consumers of the nation. The duty once in place will lead to a rise in price for both imported and home manufactured solar modules which in turn will further increase the cost of installing solar systems for consumers across various categories. Being still at an early stage of growth, the domestic module manufacturing industry might also struggle to keep up with the demands and thereby impacting the adoption of solar power plants.