Domestic solar cell and module manufacturers have urged the government to impose an equalisation levy so that units located in special economic zones (SEZs) are not affected by the government’s decision to impose basic Customs duty (BCD) on solar imports.
The industry said domestic manufacturers in SEZs would have to shut shops if there was no a level-playing field for SEZ units and “may see job losses in tune of 15,000 people”. SEZ units are considered on a par with foreign companies and, hence, Customs duty is imposed on them too.
The Centre is considering imposing a 2 per cent equalisation levy to incentivise SEZ manufacturers for transactions with domestic customers.
“Equalisation levy will set off the benefits availed by SEZ units while setting up the facilities. We second this proposal, as it will ensure that the manufacturing units located in DTA and SEZs are placed on similar footing in terms of Custom duties,” said Saibaba Vutukuri, chief executive officer of Vikram Solar.
According to the industry data, 2,000 Mw of the 3,100 Mw of cell manufacturing capacity in India is in SEZs. In module manufacturing, 38,00 Mw of the 9,000 Mw is inside SEZ.
The ministry of new and renewable energy has proposed 20 per cent BCD on imports of solar cells and modules as part of the country’s recent efforts to ban imports from China. Close to 80 per cent of India’s solar capacity is built on Chinese solar gears.
The Directorate General of Trade Remedies (DGTR), in a recent order, suggested extension of safeguard duty levied on solar imports coming from China. The current safeguard duty on Chinese imports is 15 per cent, due to expire this month. DGTR has suggested 14.9 per cent duty for one more year. This was in response to a petition by several domestic solar manufacturers asking for a level-playing field against low-priced Chinese imports.
The industry is also concerned about the supply chain disruption of wafers from China due to recent import ban. Wafers are an important component for solar cells and modules. However, the industry is expecting policy push for wafer and ingot manufacturing in India.
“The government is pushing for an ambitious policy for silicon wafer manufacturing in India and we are hoping it will come soon,” said Avinash Hiranandani, global CEO and managing director, RenewSys. He said the price difference between Indian and Chinese solar gears was 20-25 per cent mostly due to low interest rates in China.
“Domestic lenders should consider lower rates for the solar manufacturing sector. The government should also reduce the capital cost for solar manufacturing,” said Vutukuri.
The industry said that by pushing indigenous manufacturing, the country could avoid outflow of $18 Billion of forex reserves.