Impact of Basic Custom Duties (BCD) on Indian Solar Sector


As India is bracing to achieve its target of 100 GW of solar energy by 2022, there are issues related to increasing import bills due to solar photovoltaics. India’s module and cell manufacturing remains below par when compared to its Chinese counterparts. In wake of promoting domestic manufacturing, the government earlier had imposed safeguard duty and now plans to impose basic custom duty (BCD) to further incentivize the domestic manufacturing industry. In the Union Budget this year, the government proposed a BCD of 20% on solar cells and modules. 


Let see what our experts think :


Instead of imposing trade barriers, the government should focus on reducing the cost of domestic manufacturing of modules and cells with cost subsidies, interest subversion and lower power cost. This will also ensure competitiveness in the global market.


As India now focuses on promoting ”Atma Nirbhar Bharat” which is a step in the right direction, the main question remains whether the government will choose to promote one segment at the cost of many more segments. 

Pinaki Bhattacharyya, Co-Founder & CEO, AMP Energy India

I strongly recommend against the imposition of BCD as it negatively impacts the entire solar industry. Power from utility-scale projects becomes more expensive and raises the cost of procurement from the discom. This, in turn, raises the power cost for the end consumer. Roof-top projects which are seeing a demand depression due to the pandemic will be further depressed and prolong the recovery. Lastly, Indian manufactures who have been unable to compete in the past when safeguard duty was in place, would not find much legroom in a depressed solar market.

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Animesh Damani, Partner, Artha Energy Resources

Indian manufacturers should take this opportunity of trade to improve their manufacturing capability not only for solar modules and cells, but we should also focus on other materials such as becksheet, glass, junction boxes and aluminum frames which are predominantly imported by the module manufacturers as part of their supply chain requirements. The trade restrictions on China are going to give temporary relief and there is a need to focus on technology development which will be a key to win with competing Chinese firms.  Government should come up with research and development programmes in solar PV modules and develop joint R&D facilities for the consortium to module manufacturers. 

Dr. Sanjay Vashishtha, CEO, First Green Solar

In my opinion, over the next one year, BCD in the range of 10-30% should be levied on cells too. This will boost morale and confidence of Indian manufacturers like us, to expand the existing manufacturing capabilities into solar cells too. 

I strongly believe that the combination of a low-cost funding to the industry and imposition of BCD will lead all of us to fulfill Atmanirbhar Bharat. I’d conclude by reiterating the fact that this will have a huge positive impact on the solar industry. And we as a team are extremely thankful to the Indian government for introducing BCD.

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Bharat Bhut, Director, Goldi Solar 

In case BCD is imposed, we can expect tariff hikes in the upcoming biddings. At the same time, the purpose of BCD must be aligned to ensure the success of local manufacturing in the long run instead of restricting the import only. To achieve that, locally manufactured products should be given preference in the tenders and be used more in India.

Also, the Government should relax or minimize the import duty of the components in the short term while incentivising the local component manufacturers to build and scale up in the interim period to meet the future demand. A Phased Manufacturing Plan of various internal components/parts would be more beneficial to achieve maximum localization and build a robust supply chain with a clear roadmap. These cohesive steps along with BCD will drive the industry to the mission of a truly Atma Nirbhar Bharat. 

Sunil Badesra, Business Head, Sungrow (India) Private Limited

We support our Honorable Prime Minister’s vision of “Atma Nirbhar Bharat”, wherein we strengthen our existing local electronic manufacturing setup, drive our R&D efforts all while generating local employment in the process. This is a wonderful opportunity for the nation to build its own resources and be an economic powerhouse in the future.

We shall continue to be in this business of Solar Inverters bringing the premium quality inverters to our customers, robust and build to last. We also believe in being self-sufficient as a nation and would like to mention that our Central Inverters are “Made in India” at our Nelamangala, Bengaluru facility. Our range of products including our legacy inverters, string inverters and microgrid solutions – best in quality, high performance driven and reliable coming from a brand that has over decades of experience.

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K. N. Sreevatsa, Country Head, FIMER (India)

Recent announcements on possible imposition of BCD are pushing Indian manufacturers and developers to brace for the potential impact of duties and prepare future case scenarios. Imposing BCD per se may curtail imports, though will be an insufficient measure for driving growth across the Indian PV industry without the complementary development of an ecosystem that promotes self-reliance.

Rajaram Pai, Business Leader-South Asia & Middle East, DuPont Photovoltaic Solutions

To read in detail, download the SolarQuarter India July Issue 2020

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