Indian solar companies call on MNRE to grandfather BCD amid concern over 10GW of projects

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on reddit
Reddit
Share on email
Email
RK Singh, minister of new and renewable energy, speaking at a public address last year. Image: Youtube/MNRE

The National Solar Energy Federation of India (NSEFI), which represents companies from across the PV value chain, has written to the Indian central government raising concerns about the upcoming imposition of a Basic Customs Duty (BCD) of 25% on solar PV cells and 40% on solar PV modules.

In a letter addressed to the minister of new and renewable energy (MNRE) R.K Singh, the organisation said the BCD, which comes into effect in April, would cause a “serious jolt” to solar developers and could increase the cost to consumers by INR30-50/kWh (US$0.4-0.66/kWh).

As a result, it has called on the MNRE to grandfather the BCD for projects announced before its office memorandum (OM) on 9 March 2021 that initially outlined the plans and rate. It said up to 10GW of projects could be adversely affected if steps were not taken.

It said the increase in cost because of the tariffs would have “an adverse impact on the perception of the renewable energy industry which is seen as a cost-effective alternative to the conventional sources of energy”.

To meet the additional cost, developers will be required to raise the funds “via short-term working capital or additional equity at a much higher interest rate leading [to] economic unviability,” said the letter, adding this would hinder business expansion plans and result in lower then expected growth in the Indian solar industry.

The BCD was confirmed in India’s budget announcement on 1 February, which was widely expected after an announcement in November 2021. The budget also saw a quadrupling of funding for the country’s Production Linked Incentive (PLI) scheme, designed to spur domestic PV manufacturing at the same time as the BCD is intended to dampen solar imports.

At the time of the budget announcement, Vinay Rustagi, managing director of research firm Bridge to India (BTI), told PV Tech the budget would be a “game-changer” for domestic manufacturing and would have a far greater impact than the PLI. A more in-depth look at the budget can be found here.

Speaking to PV Tech today, Rustagi said: “Coming on top of various other pressures like the increase in various component and logistics costs and delay in availability of modules, the duty is highly undesirable for the developers.”

That said, Rustagi thought there was little chance of any exemptions or changes to policy being made by the central government. “The chances of any relief appear pretty slim as the Ministry of Finance does not seem in favour of ad hoc waivers,” he said.

PV Tech’s sister site Energy-Storage.news has taken a detailed look at the storage announcements included in the Indian budget, examining the impact on the country’s storage sector.

And PV Tech Premium has broken down the key mechanisms and avenues available to businesses looking to set up manufacturing facilities in India as well as laying out the instruments for investing in the country’s growing solar sector more broadly.

Read Next

May 19, 2022
More than 80 US House representatives have joined a chorus of lawmakers opposing the solar tariffs investigation and pressed US President Joe Biden to expedite it.
May 18, 2022
LONGi Solar is planning to develop a 20GW module assembly facility in Wuhu City, Anhui Province after signing a cooperation agreement with local authorities.
May 16, 2022
JinkoSolar, Trina Solar and Hanwha Q CELLS are among eight PV manufacturers that have been selected by the US Department of Commerce (DOC) to provide further information on their operations as part of the agency’s ongoing tariff circumvention investigation.
May 9, 2022
US Energy Secretary Jennifer Granholm has raised concerns about the country’s ability to move to a carbon pollution-free power sector by 2035 unless there is a quick resolution to the Department of Commerce’s (DOC) solar tariff investigation.
May 9, 2022
Indian independent power producer (IPP) Azure Power has appointed Harsh Shah as CEO, effective from 1 July, following the resignation of its previous CEO, Ranjit Gupta, last month.
May 6, 2022
Tata Power Solar has landed what it claims to be India’s largest single solar EPC order of 1GW for roughly INR5500 crore (US$715 million) from Indian state-owned utility SJVN Ltd.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
June 14, 2022
Napa, USA
Solar Media Events
October 4, 2022
New York, USA