Solar thermal industry players are confident of getting back into the boom trajectory and expect the sector to clock a growth of 10% after the reduction of GST rate on inputs for solar components from 18% to 5%.
When the goods and services tax (GST) was reduced earlier, the rate on inputs for solar components was fixed at 5%. However, the wording used was 'solar power devices and components', as a result solar thermal components that generate 'heat' were classified under non-power devices inviting 18% GST.
Solar Thermal Federation of India (STFI) secretary general Jaideep Malaviya said they approached GST directorate general and the finance minister and convinced them to consider solar thermal components as part of solar energy and apply 5% GST on them.
"With this reduced GST, the end-product will become economical for the consumer and the market is expected to witness growth," Malaviya said.
Surendra Kumar, managing director, Nuetech Solar, Bengaluru, said with the reduction in GST rate the market is expected to grow by 10% as manufacturers would pass on the cost benefit to consumers.
According to the federation, when subsidies were in place the industry had crossed the Rs 1,000-crore mark. But after the withdrawal of subsidies, the solar water heater sector shrank by 40% and its size came down to Rs 600 crore.
Almost 1.5 million evacuated tubes for solar water heater were imported during 2018, said Malaviya, adding that cheaper imports of complete solar water heaters were a concern for the domestic industry.
The STFI has 25 members who almost control 80% of the market. The country ranks among the top five markets globally for solar thermal. Apart from domestic use, the solar thermal heating and cooling solutions are a cost-effective substitute for fuel oil and diesel.