Solar energy firms in SEZs pitch for equalisation levy on domestic supplies

A group of solar energy firms on Friday pitched for an equalisation levy on solar equipment supplies from special economic zones (SEZs) for domestic use to bring them at par with manufacturers in non-SEZ areas.

The government is contemplating imposing basic customs duty (BCD) on solar equipment to discourage imports, mainly from China.

Once the BCD is imposed, it would also apply to domestic solar equipment manufacturing units located in SEZs.

The industry is pushing for an equalisation levy of 1-2 per cent on solar equipment supplied to the domestic market from SEZ units, whereas the BCD could be in the range of 15-20 per cent.

The equalisation levy would bring the solar equipment manufacturers in SEZs at par with those in the domestic tariff area (DTA) which have not got the tax and other incentives received by the former, the companies said in a statement.

The companies, which include RenewSys, Webel Soar and Vikram Solar, have units located in SEZs.

"There was an apprehension that manufacturing units located in SEZ have availed certain benefits in past hence if the BCD is not levied while clearing the products from SEZ to DTA, it will put manufacturing units located in DTA at cost disadvantage," Vikram Solar's Chief Executive Office Saibaba Vutukuri said in the statement.

The equalisation levy will set off the benefits availed by manufacturing units located in SEZ while setting up the facilities, he added.

"We second this proposal for imposition of an Equalisation Levy, as it will ensure that the manufacturing units located in DTA and SEZ are placed on similar footing in terms of custom duties," Vutukuri said.

In the absence of a level playing field, domestic manufacturers in SEZs will have to shut shop and around 15,000 people may lose their jobs, the statement said.

India is planning to achieve an ambitious target of 100 GW of solar deployment by 2022 as a part of the National Solar Mission.

The companies said 33 GW capacity of solar power deployment so far has been attained largely by using solar cells and solar panels from China despite India having enough module manufacturing capacity.

India can avoid the outflow of $18 billion of forex reserves if it uses indigenous cells and modules over next four-five years, they added.