India relieves most solar modules from customs duty

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One of the major causes of uncertainty for India’s solar sector has been put to rest after the Central Board of Indirect Taxes and Customs (CBITC) clarified that most PV modules will not be subject to customs duty.

Along with the goods and service tax (GST) and the threat of anti-dumping and Safeguard duties, the customs duty has been one of the key pillars of uncertainty for the Indian market, particularly as Indian developers import an overwhelming majority of their modules.

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Solar modules had enjoyed free imports while classified as ‘diodes, transistors and similar semiconductor devices, photosensitive semiconductor devices', under the code CTH 8541. However, a new classification as ‘electrical motors and generators’ under CTH 8501, which included a 7.5% customs duty, started to be implemented gradually last year.

The issue was followed by a long standoff between developers, the Ministry of finance and customs authorities, and with vast quantities of modules held up at ports, as first reported at the time by Indian news outlet Economic Times. However, CBITC has finally come out with the following clarification:

  • Modules equipped with bypass diodes will be classified as CTH 8541
  • Modules equipped with blocking diodes will be classified as CTH 8501
  • Modules equipped with bypass diodes and blocking diodes will be classified as CTH 8501

Vinay Rustagi, managing director at consultancy Bridge to India, told PV Tech that most modules used by the Indian industry would not attract any duty as per this new clarification.

After a string of bad news, Rustagi said this was very welcome, particularly alongside the recent notice clarifying the ‘Change in Law’ provision for solar procurement.

He added that there had been increasing signs that the Ministry of Finance was going to take a rigid stance so that customs duty would apply on modules, so developers should be very happy with the final outcome.

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