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Solar equipment imports wont have safeguard duty

Ahmedabad: In a major relief to solar power producers, the central government has decided not to levy 70% safeguard duty on solar equipment imported from China and Malaysia. The move, according to National Solar Energy Federation of India (NSEFI), is expected to boost the growth of the solar energy sector.

With 90% of the equipment used in solar power projects in India currently being imported, solar power project developers are a happy lot. “The decision will greatly benefit the solar sector and boost its growth. Our efforts to make solar energy affordable will get a thrust from this step,” said Pranav Mehta, chairman, NSEFI.

“Several investors were hesitant to come to India and some even stopped financing solar power projects because of the recommendation of the safeguard duty. With this decision, the investment sentiment will improve,” he added. The levy of safeguard duty would have increased the cost of solar power projects and would have hampered the growth of solar energy sector, say industry players.  

“The solar tariffs up by 90 paise to Re 1 per unit as modules account for 60% of the solar power project cost. Ultimately, it would have impacted end consumers as developers would have passed on the additional burden onto them,” Mehta added.

As there will be no safeguard duty on imports of solar equipment, better prices for solar power are expected. “However, solar tariffs also depend on other factors, which include demand and supply equations as well,” he explained. Across India, there are about 80-100 solar power project developers, both small and big.

In January, the director general of safeguards had recommended a 70% duty on solar cells, panels and modules for a period of 200 days following a petition filed by Indian Solar Manufacturers Association (ISMA).

After the Centre’s decision, Gujarat Urja Vikas Nigam Limited (GUVNL), which had cancelled a 500MW solar power auction in April this year may soon decide to conduct re-bidding for the solar power, as bidders may now quote lower tariff, sources said.