Pre-signed PPA-backed solar projects to be exempt from new India customs duties

Solar projects in India with power purchase agreements signed prior to 1 August 2020 will be exempt from steeper customs duties on Chinese component imports, the country’s power minister has confirmed.

India’s Economic Times reports power minister RK Singh as having addressed renewable developers in the country yesterday to inform them that as long as PPAs are signed before the date the new Basic Custom Duty (BCD) comes into force, those projects will be grandfathered into the existing arrangement and therefore exempt from paying it.

Last week India’s government confirmed plans to replace the expiring safeguard duty of 15% with a new, BCD set at between 15 and 20% for solar cells, modules and inverters. It later confirmed that these duties would rise to between 30 – 40% next year, an escalation of attempts to stimulate India’s domestic solar manufacturing sector.

While the potential for such measures to achieve that aim has been questioned – India’s domestic solar manufacturing capacity is limited in comparison to the country’s lofty solar deployment targets – news of an exemption for already-backed projects will be welcome news to developers active in the region.

The exemption would need approval from India’s Department of Revenue, however RK Singh is said to have confirmed that if this was not forthcoming, India’s Ministry of New and Renewable Energy, which Singh also heads, would allow developers to claim reimbursements for duties paid.

The announcement came on the same day that Solar Energy Corporation of India (SECI) confirmed record-low bids within its latest tender, which awarded project rights to seven developers in total. Spain’s Solarpack came in the cheapest at INR2.36/kWh, equivalent to around €28/MWh.

RK Singh welcomed the news on Twitter, arguing that it showcased the country as an attractive investment destination.