No duty on Chinese imports for public solar power projects; Conditions apply

NEW DELHI: Chinese imports for public solar power projects will be exempted from the basic customs duty if the power purchase agreements were signed before the implementation of the duty, the Ministry of New and Renewable Energy (MNRE) said on Tuesday.

The decision is subject to the approval of the Department of Revenue under the finance ministry, said RK Singh, minister of state for power and new and renewable energy, told renewable energy companies at a meeting called by his ministry to convey the decision.

In case the finance ministry does not allow such a provision, Singh assured the companies that the MNRE will allow developers to claim reimbursements for imports from China, provided their PPAs are signed before August 1.

The latter route would mean that there is an understanding between the solar developers and the government that the projects cost more than the allocated budget at the time of closing the deal, and hence compensation will be provided to the developers via the distribution companies.

Last week, Singh had told media persons that the government planned to levy 15-20% duty that would rise to 40% in a year's time, to reduce dependence on China.

Called a “grandfather clause”, the move comes as a relief to local manufacturers who were surprised by the government's decision to impose such a duty. About 80% of solar imports come from China.

However, developers have complained about a previous “grandfather clause” not being honoured. “We have seen a similar clause for the pass-through of the safeguard duty, but have not seen any money from the state discoms yet,” said an industry executive present at the meeting.

Smaller solar companies have also requested an exemption for private PPAs. “The cost for private deals which are already signed will increase, leading to a lot of complications in the already negotiated deals,” said a developer, who did not wish to be identified.

Singh also said that the approved list of models and manufacturers (ALMM) is expected by September, which is expected to boost domestic manufacturing in India. All projects using solar components will only be allowed from manufacturers on this list, which will be implemented from October 1.