Mumbai, Jul 10 (PTI) India will lose nearly Rs 50,000 crore in foreign exchange if solar developers are given exemption from basic customs duty on Chinese imports, the All India Solar Industries Association (AISIA) has said.
On July 1, Power and New and Renewable Energy Minister R K Singh had said that Chinese imports for public solar projects will be exempted from duty if power purchase agreements are signed before implementation of duty, which is proposed from August 1 this year.
With safeguard duty scheduled to end on July 31, the government has proposed to impose a 20-25 per cent basic customs duty on solar modules and around 15 per cent on cells, that will gradually go up to 40 per cent for both.
'We are happy that the government is taking measures to promote domestic manufacturing. But at the same time, it will have to also address the challenges which the domestic manufacturers are facing currently due to lack of clarity on policy front and delay in implementation of duties, amongst others,' AISIA Chairman Hitesh Doshi said.
He noted that there are nearly 25 GW of contracts which have been awarded for which the government has allowed developers to avail the pass through benefits which will exempt imports from China from the duty.
'The government's decision on the 'pass through' clause will adversely impact domestic manufacturers as they will have no orders for the next 2-3 years. Already the COVID crisis has affected the manufacturers and this will add to our woes,' Doshi added.
India imports nearly 85-90 per cent of modules from China among other components.
According to Vikram Solar CEO Saibaba Vutukuri, India can save USD 18 billion of forex outflow by investing USD 4-5 billion in solar manufacturing, considering the government's plans to add large capacities of solar energy in the country.
'The government is not going to lose any revenue if they give a pass through to domestic manufacturers. If developers get pass through benefit for purchasing components from domestic manufacturing, then we will be able to add capacities,' he added.
Doshi further noted that in the absence of the support from the government, not only will expansion capacities fail to take off, the existing domestic solar manufacturing industry will also come to a standstill and cease to exist with more and more companies becoming bankrupt. PTI PSK RVK