Centre to raise tariff barriers on imported solar and wind equipment

The development comes at a time when India continues to explore all possible options when it comes to bridging its enormous trade deficit with manufacturing powerhouse China

To promote the domestic manufacturing capacity of solar and wind equipment, the government will increase tariff barriers on imported solar panels, wind turbines and their components. Imported Chinese solar equipment are likely to be affected the most.

This comes at a time when India is exploring all options to bridge its enormous trade deficit with China. As of FY19, the deficit stood at $53 billion, down $10 billion after India raised import duties on a broad range of products — mostly originating from China — as many as eightfold in 2018.

Speaking at curtain raiser of RE-Invest, India’s flagship investor conference for renewable energy, R K Singh, Union minister of state (power and new & renewable energy), said: “Right now, safeguard duty is imposed on solar equipment, which will be diluted in few years. We will increase tariff on solar equipment down the value chain in the coming years.”

Anand Kumar, secretary at MNRE, said the components to make a solar panel such as glass, metal cast and other equipment that are imported, will also see a hike in duty. “We want global firms to come and set up manufacturing units here — to not only cater to the demand in India but also of the world,” he said.

Last year, the Centre had announced imposition of safeguard duty for two years — 25 per cent for that year, 20 per cent for the next six months, and 15 per cent after that. The duty would specifically impact solar panels coming from China, given above 85 per cent of India’s solar capacity is built on Chinese panels.

In wind, however, domestic manufacturing caters to above 90 per cent of the sector’s demand. Global players such as Vestas have set up manufacturing units in India.

Meanwhile, the country’s first tender for solar manufacturing has seen tepid interest. MNRE announced the tender for setting up 6 Gw solar power plants, linked to the setting up of 2 Gw (per annum) of solar manufacturing plant.

After several extensions of over a year, the Centre in January decided to cancel the lone bid that came from Azure Power with Waaree Energies.

Now, the Centre has revised the tender specifications for the upcoming bidding process. Hoping to attract higher interest, the tariff cap has been set at Rs 2.75/unit. In an interesting amendment, MNRE has allowed using imported solar modules at the power plant and not necessarily from the manufacturing unit set up by the company.

In a bid to build up local export capacity, the Centre has focused on exports that can substitute Chinese exports to the US, which are now facing heat due to the trade war.

Bridging trade deficit 

• India is exploring all options to bridge its enormous trade deficit with China

• As of 2018-19, the deficit stood at $53 billion, down by $10 billion

• This was because India raised duties on many products by as much as 8x in 2018