Even as investigations continue in India to levy safeguard duties and anti-dumping duties, custom officials are asking for import duties on solar modules.
Indian custom officials have reportedly held around 2,000 shipping containers filled with solar modules at four seaports and have demanded 7.5% customs duty on them. Reuters reported that custom officials have classified solar modules as “electric motors and generators” which attract customs duty while “diodes, transistors and similar semi-conductor devices” do not.
The Ministry of New & Renewable Energy has jumped in to resolve the matter. It has asked the Ministry of Finance to exempt solar modules from import duty. No decision has been made on this matter yet.
Any custom duty on imported modules could potentially derail numerous solar power projects which were recently allocated in highly competitive auctions. Solar power tariff bids in India have collapsed significantly over the last few months in conjugation with the fall in international solar module prices.
Government authorities are also investigating petitions filed by Indian solar module manufacturers which are struggling due to the overwhelming share of imported solar modules and cells being used in India. According to the Indian Solar Manufacturers Association (ISMA) 90% of the solar modules being used in India are imported, mainly from China. This figure has grown steadily as India’s installed solar power capacity has exploded over the last few months.
India set up a program – the Domestic Content Requirement – under the National Solar Mission to help Indian manufacturers increase their share in the market. However, the program was challenged, successfully, by the United States at the World Trade Organisation. The decision has forced India to abandon the DCR program for the moment and the government is now offering DCR capacity under the open category wherein developers are free to use Indian or imported modules.