GST impact on solar products and panels have drastically increased due to the applicability of GST of 5 to 18 percent on the range of products. This has also rasied the price from manufacturing to the supply anve created a worrisome siutuation in the industry. As India’s emerging solar category could educate tariffs to develop by approximately 10%. It could also bolster domestic transaction and jobs. The startegy of growth depends on various factors and India has to struggle alot in order to raise its capacity in solar arena as there is also lows in solar power import tax, which is acute to flat Rs. 3 by the kilowatt-hour (kWh).
Mahindra Renewables Pvt. Ltd, Acme Solar Holdings Pvt. Ltd and Sweden’s Solenergi Power Pvt. Ltd experiment Rs 2.979 using kWh, Rs2.97 by kWh and Rs2.974 by the agency of kWh, respectively, to get contracts to cause to be 250 megawatts (MW) plants each to ensure the worlds largest solar power shovel of 750 MW in Rewa, Madhya Pradesh. In the study, it said, “multiple GST rates and their uncertain applicability to different types of equipment and services for solar projects is a growing concern from solar project developers and investors, GST also impact the pace of the second phase of solar park development for additional 20,000 MW capacity announced in the recent budget.”
“The increase in solar tariffs would also vary across states; higher for states such as Rajasthan where VAT and Entry Tax exemptions are currently provided for solar equipment, as opposed to Andhra Pradesh and Gujarat where VAT and Entry Tax exemptions are not provided, With the annual solar power capacity addition expected to be more than 12 gigawatts (GW) in 2017-18, it is vital that major hurdles for deployment, such as the potential impact of GST on the sector, be ironed out as early as possible. GST offers many long-term benefits, but the Ministry of New and Renewable Energy (MNRE), Solar Energy Corporation of India Limited (SECI) and other related agencies must provide clear guidelines regarding the applicable GST slab for upcoming solar power projects and introduce government mechanisms to offset the short-term negative impacts of GST.” it added
In a recent report, there is a hint that the GST implementation has made the solar projects more expensive which is around 10 to 12 percent. India Solar Industry Association has given this information and also appealed to the authorities and government to reduce the tax burden on the solar related components and projects. The solar association has stated that the tax applicability was around 5 percent earlier but now as the tax incidence has increased, which has also hiked the tax rates on module mounting structure, tracker, inverter and on the purchase of cables and transformers.
It was also said the before the GST implementation there was no tax rate on the solar modules but now after the GST, there is a 5 percent levy on such products which has taken the toll on the industry. The GST rate is around 5 to 18 percent on the solar products and modules which has hiked the overall prices at around 18 from production to development phase.
GST Makes Solar Implementation Slow in India
The Central Government’s ambitious aim of 100 GW of solar power generation by 2022 has been slowed down by its recent move of imposing import duty on PV panels and modules imported from China. The same was confirmed by a UN report. The report blames Government policies for the slow down observed in India’s solar power expansion. The 7.5% import coupled with the local GST has had a grossly negative impact on the supply of imported Chinese PV units. The report also recorded a slow down in Solar auctions across the country. However, it is hoped that the GST impact was temporary and rate of PV installations will recover from the 2017 slow down. However, the report raises concern over India’s oscillating $6-14 billion investment range since 2010. The UN report fears that the investment lacks the firepower that would enable the developing nation to accomplish its goals for 2022.
Read Also: What If Electricity Comes Under Goods and Services Tax India?
India’s public investment in renewables has gone down by 20 per-cent for 2017. However, venture capital and private equity investment are the new silver lining as far as India’s Renewable Energy sector is concerned. With a $457 million investment, it witnessed a growth of 27 percent. The primary reason for this is India’s untapped and growing Wind Energy Market. India’s private renewable power producers managed to bag three of the five largest deals and in the process surpassed even their global Counterparts. Greenko Energy, an independent power producer based in Hyderabad, outshined others and managed to raise $155 million from Abu Dhabi Investment Authority and GIC, the sovereign wealth fund of Singapore. The two investors had already invested $230 million in the company in 2016. Other independent Indian power producers who successfully attracted worthy investments include Hero Future Energies ($125 million) and Clean Max Enviro Energy Solutions.
