Govt to impose basic customs duty of 25% on solar cells and 40% on modules from April 2022
15 March 2021
Beginning 1 April 2022, all imports of solar cells and solar modules will attract basic customs duty of 25 per cent and 40 per cent, respectively, as announced by the ministry of new and renewable energy (MNRE).
The BCD on solar modules with HSN Code 85414012 will be 40 per cent, and solar cells (85414011) 25 per cent.
The directive, which has received the consent of the ministry of finance, will not, however, apply in the case of projects that have already been auctioned.
The ministry has directed all implementing agencies and stakeholders to take note of any possible changes in the tender documents. Bidders have been asked to take the BCD into account while quoting tariffs in all future bids where the last date of bid submission falls after the notification.
The imposition of BCD, which is part of the ‘Atmanirbhar Bharat’ initiative to support domestic manufacturing, will not be considered as ‘change in law’ for such bids, the ministry stated.
The BCD on solar cells and modules was poposed in Budget 2020 anf MNRE has been considering imposition of BCD ever since. This has, however, been delayed in view of essential imports of machinery and capital goods for local PV manufacturers.
While PV manufacturing units in special economic zones (SEZs) may suffer from the duty impost, domestic solar manufacturers believe that BCD is crucial for the sector in the long term.
Also, cheap imports of solar cells and modules and falling tariffs have left power from units with higher tariffs without any takers. Distribution companies have delayed signing of power purchase agreements with 19 GW of power with higher tariffs with no alternative than cutting tariffs.
The Solar Energy Corporation of India (SECI) has been struggling to sign power sale agreements (PSA) with the distribution companies, especially after record low tariffs in the recent auctions.