Due to domestic solar projects facing uncertainties from vendors in China, the government is contemplating delaying the imposition of customs duty on imported solar equipment. It has come to the fore that Chinese companies are delaying supplies by invoking force majeure.
Power and Renewable Energy Minister RK Singh told ET that the ministry has received a demand highlighting the problem. “Of course, my orientation is ‘buy Indian’. But there are no sufficient stocks to buy Indian. So we are mulling over either timeline extension or duty extension. We haven’t taken any view.”
Chinese companies have been alleged of taking advantage of the proposed 40% customs duty on solar equipment from April next year. As such, Indian firms have to pay more than 1.5 times of the originally signed contract. Moreover, equipment supply from China also remains uncertain as the Chinese government has imposed severe power cuts on its industries, leading to abrupt increase in solar panels cost and retraction of signed binding contract. Industry insiders said China’s travel ban on Indian firms, senior executives of Indian solar companies are not able to visit vendors in China for negotiations.
The Solar Power Developers Association, in a letter to the ministry, said that BCD imposition will be virtual death knell for developers if not extended. “It is increasingly becoming unviable to do business for solar power developers. Imposition of BCD of 40% (total becomes 61%, including GST and cess) wef April 1, 2022 will be aggravating the situation. The Chinese suppliers are taking advantage of this deadline and forcing Indian IPP to pay more than 1.5 times of original signed contract. Through this deadline we are only benefitting Chinese companies.”
The association added that extension of BCD imposition by at least one year will be a win-win situation as domestic manufacturing will come up and Indian solar developers won’t have to depend on Chinese imports. “The extension would not hit the proposed solar equipment manufacturing under production linked incentive scheme as the auction is likely to be concluded this month and facilities have a minimum gestation period of 18 months.”