Power Ministry joins 'Make in India' pitch, calls for curbs on imports

Customs duty on Chinese solar gears, low cost finance to those using Indian goods

The Ministry of Power, in a discussion with the electricity industry and key stakeholders of the sector, has asked for a renewed focus on domestic manufacturing and announced curbs on imports. R K Singh, the Union minister of state for power, new and renewable energy, announced that a basic customs duty (BCD) would be imposed on imports of solar cells and modules. The minister said the duty would take effect in August. 

A BCD of 20 per cent on solar imports was proposed in the Union Budget 2020-21. However, the ministry said it would remain zero. Solar cells and modules are exempt from any BCD, according to a 2005 notification of the department of revenue. “A clear trajectory of BCD would be declared so that there is no uncertainty about government policy,” said the public statement by the power ministry.

It said the department would also issue an approved list of models and manufacturers in renewable energy effective from October 1. 

“This will ensure that all solar power projects which are bid out (in accordance with) the standard bidding guidelines will be required to procure solar cells, solar modules, and other equipment from manufacturers figuring on the approved list,” it said. The minister also informed the industry that financing by PFC, REC, and the IREDA would be structured in such a manner that developers who used domestically manufactured equipment would be charged lower rates of interest. 

The minister also urged the industry not to import any equipment/materials/ goods in which there was sufficient domestic capacity. 

 

 

He further said for those goods and services where domestic capacity was not available, “then it (import) should be allowed only for a fixed timeframe of 2-3 years”. “During this period indigenous manufacturing of these items would be developed by an enabling policy/tax incentives/start-ups/vendor development/ R&D support so that in the next two-three years all these items get domestically manufactured. Till then goods so imported shall be tested in Indian laboratories for adhering to Indian standards and also to check the presence of malware,” the minister told the industry.

The minister also said prior approval from the ministry would be needed for importing power sector equipment.

“For promoting Make in India and reducing import dependency, it is essential that developers in transmission, thermal, hydro, distribution, and renewables need to join the national campaign of ‘Aatmanirbhar Bharat’ and wholeheartedly adopt the ‘Make in India’ policy of government of India,” Singh said.

Barring a few, all privately owned thermal power generation units, with a capacity of roughly 40,000 Mw, constructed over the past 10 years have been built on Chinese equipment.

The public sector units have relied on BHEL for supplying boiler-turbine-generator (BTG) for their power generation units.

However, thermal power units of leading private players such as Essar Power, Adani Power, Reliance Power, GMR Energy, and Sterlite Energy have Chinese companies as their BTG suppliers, according to the data by the Central Electricity Authority.

At the same time, close to 75 per cent of Indian solar capacity is built with Chinese solar cells and modules owing to low cost. Indian electrical and electronics makers have long been complaining against Chinese counterparts for their below-market rates and security concerns.

In the past decade, the import of Chinese electrical equipment has grown by 19 per cent, according to the Indian Electrical and Electronics Equipment Manufacturers’ Association (IEEMA).