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Centre Allows 26,000 MW Solar Capacity Bidded Before March 2021, Under Concessional Import Duty Scheme 

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Investments of Rs 1.3 lakh crore in solar projects which were bid out before March 2021 are now exempted from the revenue department’s order scrapping lower customs duty under the concessional project import scheme for solar sector, Power and Renewable Energy Minister Raj Kumar Singh told TOI. 

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This will allow for 26,000 MW of capacity to be restored at various stages of implementation. It also allows for equipment imports of Rs 60,000 crore at 5% duty instead of the 40 % basic customs duty (BCD), which took effect on April 1, 2022. Singh stated that the ministry has granted a 12-month extension of concessional custom duty, for pre-March 2021 projects in order to ensure capacity increase do not suffer, reports TOI.

India implemented a basic customs duty (BCD), of 40% on solar cells and 25% on solar modules, effective 1 April, 2022. This was done to reduce imports from China and increase domestic manufacturing. Nearly 85% of India’s solar capacity is made from imported modules and cells, mainly from China.

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To avoid high tariffs on modules and cells, several solar developers have tapped into the “project import scheme”. Project imports are designed to allow import of machinery, tools and apparatus for the construction of new units or substantial expansions of existing ones. They can be imported at a concessional rate of 5%, later raised to 7.5%.

Solar power developers have criticized the central government’s decision to exclude solar power projects from the list that are eligible for a concession of 7.5% import duty under the project imports scheme.

According to the government, the exclusion closed a loophole that allowed developers to bypass the 40% import duty on solar projects in order to encourage local manufacturing. The decision, according to solar power developers, is a significant setback for the country’s plan to increase its solar power capacity.

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