New duty structure for equipment import, 40% BCD on solar gear: R K Singh

Discoms loan scheme oversubscribed, power rates to fall after new Electricity Act

India will set a new duty structure for power equipment which will discourage imports in the sector, union minister of state for power, new and renewable energy R K Singh said during a virtual press conference. Referring to the efforts of the Centre in curbing imports from China, the minister said solar gear coming in India would be levied basic customs duty in the range of 20-40 per cent.

Close to 75 per cent of India’s solar power capacity is built on Chinese solar modules. It is also one of the top-10 imported items from China in the country. 

“It has been proposed that a basic customs duty of up to 25 per cent will be imposed on modules in the first year. In the next year it goes up to 40 per cent,” said Singh.

For solar cells, the BCD would be 15 per cent this year and 20-30 per cent from next financial year onwards. The ministry of power on Tuesday announced several barriers for import of equipment for power generation, transmission and distribution gears, solar cells and modules.

For non-solar electric equipment, the minister said there will be a novel duty structure which will hinder import of the equipment for which there is sufficient domestic manufacturing. “For conventional power industry, whatever is being made here in India, I would consider levying duties where there is no duty. These duties will vary. As some states have ‘free-trade agreements’ with some countries for certain products. So the duty structure would be such that it encourages people to buy domestic,” Singh said.

The minister said as power sector is sensitive due to security issued involved, imported material would be checked when they are imported. “There have been sufficient information regarding cyber-attacks through power infrastructure. Every country has taken measures to protect is power systems so shall we. Every product that is imported will be thereby checked,” the power minister said.

There will also be a list of ‘prior-reference countries’ from where any import would need government’s approval.

Singh also dispelled the contentions made by opposition-ruled states against the proposed amendments to the Electricity Act. Several states including Bihar, Telangana, Tamil Nadu and Kerala have opposed the draft bill. The states have raised concerns on the introduction of ‘direct benefit transfer’ of electricity subsidy, new structure of state electricity regulatory commissions and cost of power.

“Power tariffs will come down after the reforms we are undertaking. The Central generating companies are absorbing the hike in coal and freight tariffs. There is a reduction in power supply costs to power distribution companies because of the merit order dispatch,” Singh said.

Regarding DBT in electricity, Singh said, it will be beneficial for both the state governments and as well as the discoms. He said the reforms for the discoms is received well. The special loan scheme announced by the Centre under the ‘Aatmirbhar Bharat’ package has been oversubscribed, the minister said.

“States have requested around Rs 93,138 crore under this loan scheme. This will help them clear their dues and take up further reforms,” Singh said.