Supporting the impact of higher import duties on solar modules and cells, the government has started providing incentives to the domestic solar industry.
But it seems that there is no intention of the government to provide tax relief to the importers of solar modules, for support, the government is open to validating the workable plans shown by the industry for support.
The government is thinking that incentives can be provided to the industry wherever required however taxes can oppose the same. Add to litigation, and ask for tax breaks.
The businesses are looking for ease for the projects which were bid out before the notification of the customs duty. However, the government thinks that these exemptions could make practical issues mentioned by the official.
The government sees creating an exemption-free tax regime as also directed that they are not in the mood to provide the tax exemption.
In the month of March 2021, the government announced a 40% basic customs duty (BCD) on solar modules and 25% on solar cells with effect from 1 April 2022 in a bid to cut imports, most of which come from China, as well as promote domestic solar module production to fulfil local demand. The social welfare surcharge (SWS) takes the customs duty on the solar modules to 44%.
Among various steps to reduce the dependency on imports, the Center notified the production-linked incentive (PLI) scheme for the solar modules. In the union budget for FY23, Rs 19500 cr has been given by Finance Minister Nirmala Sitharaman in PLI incentives for local manufacturing of solar modules drawing a total of Rs 24000 cr. Beneath the scheme, the government would have declared an incentive of Rs 4500 cr.
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As per the industry participants, the augmented import duty can derail the installation of solar projects given before the levy of the duty that raises the rates of developing the solar projects as solar modules build 60% of the total project cost.
The representations would be provided by the people to the ministry, familiar with the developments and new renewable energy asking for the leadership of projects given till 9th March, during the announcement. But the government does not have any intention to furnish any exemption.
Issues sent to the department of revenue and the ministry of new and renewable energy give no answer.
Some solar power developers attempt to prevent filing the duties. Some developers were expressing whole solar plants as a “customs bonded warehouse” to prevent filing taxes.
The concessions had been cancelled on 11th July by the Central Board of Indirect Taxes and Customs; they would have been granted beneath the bonded warehouse scheme, which permits the solar developers to defer the payment of the steep import duties. The case would be before the court.
India seeks to reach 500 GW of installed renewable energy capacity by 2030 out of which 280 GW is expected to be solar.
On 30th June the capacity of the total solar power stands at 57.706 GW as per the information via the power ministry. India has summed 3.9 GW of solar capacity in the June quarter, a rise of 15% with respect to 3.3 GW installed in the former quarter.
