Power Ministry Requests Finance Ministry To Dispose of Custom Duty For Solar till 31st December 2023

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Power Minister, R.K.Singh has recently written a letter to Nirmala Sitharaman, Minister for Finance proposing basic custom duty structure and to suspend any custom duty for raw materials used for manufacturing solar.

The letter mentioned that “Against the target of installing 175 GW of renewable power capacity by the year 2022, we have installed more than 81 GW, of which 30 GW is from solar. Another 55 GW of solar power projects are either under installation or have been bid out. With this, I am fully confident that we will not only achieve the target of 175 GW but exceed it.”

One of the major impediments to the growth of the domestic solar PV manufacturing industry is the cheap import of solar PV cells and modules, in large quantities, without attracting any Basic Customs Duty (BCD) and currently, imports of solar PV cells and modules are classified under Customs Tariff Head (CTH) and are therefore not subjected to any Basic Customs Duty (BCD).

The minister stated that the ITA-I Agreement, signed in 1996, was for products/ equipment used in Information Technology, whereas the solar cells or solar modules/panels are used essentially for the generation of clean energy. As such, the exemption for such solar PV cells and modules/panels under ITA-I should only be allowed only if they are used in Information Technology products/equipment. For any other use, like production of solar power; Basic Customs Duty (BCD) may be levied in a phased manner to encourage ’Make in India’.

The ministry further proposed the following Basic Custom Duty structure for Solar Cells and Modules:

Ministry also requested to dispose of any customs duty for solar PV cells and Modules, there should be no duty On Wafers, EVA, Glass, Silver Paste, Aluminium Frames, Structures and other raw materials used for manufacturing of solar PV cells and modules till 31 5 December 2023 to promote ‘Make in India’.

After 31 st December 2023, 15 % customs duty should be levied on all items

used in the manufacture of solar cells and modules, the ministry suggested.

Presently solar PV cells and modules/panels under Customs Tariff Head (CTH) are provided as a single entry, the ministry suggested that the same may be separated into two different Customs Tariñ Heads i.e. (i) solar PV cells, and (ii) solar PV modules/panels. Which will help to provide differential import duties and differential duty trajectory for both solar PV cells and solar PV modules/panels.

The Ministry requested the finance minister to look into the matter and take the earliest action.

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