Imported solar panels are the centrepiece of a duty dispute that has stalled several consignments of imported panels landing in Indian ports. According to sources, the number of stalled containers has nearly doubled over the last few months as solar panel importers have disputed port officials’ reinterpretation of import duty regulations.
From the last quarter of 2017, solar power projects importing solar panels have been asked to shell out an import duty of 7.5 per cent on the consignments. The demand, according to power producers, is being done on the basis of customs and excise department officials recategorising solar panels into electrical generators. While solar panels do not have any import duty on them, a duty of 7.5 per cent is levied on electric generators.
“We have imported solar panels at zero duty for years now,” said a senior executive at a solar power project developer. “The reclassification has been sudden and we have taken it up with the respective ministries to no avail so far. The development is already increasing costs for projects where bids were made based on zero duty.” Chennai Port sources confirmed the dispute, but declined to reveal the number of consignments affected. According to reports, the Indian Solar Association claimed that the number of consignments stuck at ports have touched 2,000 to date and are worth $150 million.
The reclassification has being done even as the government probes the feasibility of anti-dumping duties (ADD) on solar panels. Import data shows that the majority of panel imports are from China. India is China’s second largest market for solar equipment. Such imports were worth $3.2 billion for FY17.
While Indian manufacturers are pushing for the ADD, which will help them close the price gap with Chinese competitors, solar project and power producers say ADD on solar panels would significantly increase costs of solar power producers since almost 90 per cent of these needs are currently met by imports. Sources also say that the government is mulling imposing duties on panels imported for future power projects, while simultaneously exempting panels imported for existing projects.