Indian Solar Producers Relieved as Government Revoked Import Duty

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Indian Government scrapped off the duty on solar modules, making it simpler to import the merchandise after an immediate change in customs policy, which generated a logjam of shipments at Indian ports this year.

Several consignments of solar modules worth more than millions were organized for significantly more than 3 months at ports after Indian customs officials in August demanded that a number of them are classified as “electric motors and generators”, carrying a 7.5% import duty.

The finance ministry reversed the policy last month, stating in a notice that a lot of solar modules should revert for their original classification and that no tax should be levied on them.

Indian component makers have struggled to contend with Chinese companies such asĀ  Trina Solar and Yingli and have sought anti-dumping duties along with long-term safeguards.

However, the logjam of shipments at ports posed a frustration for solar energy producers and threatened to delay Prime Minister Narendra Modi’s plan of nearly tripling the country’s total renewable energy capacity to 175 gigawatts (GW) by 2022.

The master plan has encouraged foreign investment in this sector, with Japan’s SoftBank and Goldman Sachs and others purchasing solar projects in India.

Any duty is bad news for solar energy producers such as SoftBank-backed SB Energy but best for local solar component makers such as Indosolar and Moser Baer.

The change in policy last year generated logjams because it wasn’t immediately clear which modules belonged to the newest classification. To help relieve this situation, customs officials agreed to release a shipment if importers paid a bank guarantee to cover any duty they would be needed to pay.

An executive at the Indian unit of Germany’s Enerparc, which had 30 of its containers stuck at the port of Chennai, said there is still some uncertainty about the method even although duty has been scrapped.