Duty on solar gear imports may be defered

The government has received a demand saying the Chinese companies are delaying solar gear supplies by invoking force majeure. As per Indian companies, Chinese firms are taking advantage of the proposed 40% customs duty on solar equipment from April’22. The Chinese firms are asking Indian companies to spend more than 1.5 times the original amount. Further, there are no sufficient stocks from Indian manufacturers. Further, China has imposed a travel ban on Indian firms. This is making negotiations of top executives of Indian solar firms with Chinese vendors.

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Source: Pexels

Earlier this year, there was a rise in the prices of commodities and sea freight. According to the contracts between the Chinese firms and Indian solar gear makers, there is no scope for price variation. Thus, any increase in the cost of inputs will have to be borne by the companies. “It is increasingly becoming unviable to do business for solar power developers. Imposition of BCD of 40% (total becomes 61%, including GST and cess) wef April 1, 2022 will be aggravating the situation. The Chinese suppliers are taking advantage of this deadline and forcing Indian IPP to pay more than 1.5 times of original signed contract. Through this deadline we are only benefitting Chinese companies,” the Solar Power Developers Association informed the ministry.

Power and Renewable Energy Minister, RK Singh, said that therefore, the government is considering delaying the imposition of customs duty on imported solar gear. Alternatively, it may also allow an extension of the deadline for the completion of domestic solar projects. However, this extension is for those companies which are facing supply uncertainties from vendors in China. Thus, it will not affect solar equipment manufacturing under production-linked incentive scheme.

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