Government May Defer Duty on Solar Gear Imports, Extend Project Deadlines

The federal government is mulling delaying the imposition of customs obligation on imported solar gear or permitting extension of deadline for completion of domestic solar projects that are dealing with provide uncertainties from distributors in China, energy and renewable vitality minister RK Singh informed ET.

“We have received a demand saying there is this problem (Chinese companies delaying supplies by invoking force majeure). Of course, my orientation is ‘buy Indian’. But there are no sufficient stocks to buy Indian,” RK Singh, Minister of Power and New Renewable Energy, Government of India, said.

“So we are mulling over either timeline extension or duty extension. We haven’t taken any view,” he added.

Domestic solar companies allege that Chinese companies are taking advantage of the proposed 40% customs duty on solar equipment from April next year, making Indian firms pay more than 1.5 times of the originally signed contract.

The Chinese government has imposed severe power cuts on its industry which has caused an increase in the cost of solar panels and retraction of signed bidding contracts. Thus, the equipment supply from China is also uncertain.

Rising prices of polysilicon and increased sea freight had led to solar equipment prices rising to a record high earlier this year.

The contracts for upcoming solar power plants do not have provision for price variation, and any increase in the cost of inputs will have to be borne by the companies. As per the contracts, change in price can only be allowed when there is a change in law or force majeure.

Solar power project developers have written to the renewable energy ministry seeking extension of the duty deadline by a year.

The association said extension of BCD imposition by at least one year will be a “win-win situation as domestic manufacturing will come up and Indian solar developers won’t have to depend on Chinese imports”.

“BCD imposition will be virtual death knell for developers if not extended,” Solar Power Developers Association recently told the renewable energy ministry in a letter.