The ministry of power in a discussion with the industry and key stakeholders of the sector asked for renewed focus on domestic manufacturing in the power sector and announced curbs on imports.
Union minister of state for power, new and renewable energy announced that a basic customs duty (BCD) would be imposed on the import of solar cells and modules. The minister said the duty would be imposed from August onwards.
BCD of 20 per cent on solar imports was proposed in the Union budget 2020-21, however the ministry of new and renewable energy (MNRE) later clarified that it will remain zero. Solar cells and modules are exempted from any BCD, according to a 2005 notification of the department of revenue.
"A clear trajectory of BCD would be declared so that there is no uncertainty about government policy,” said the public statement by the ministry of power. It said the department would also issue an approved list of models and manufacturers in respect of renewable energy effective from October 1, 2020.
“This will ensure that all solar power projects which are bid out as per the standard bidding guidelines will be required to procure solar cells and solar modules and other equipment from manufacturers figuring in the approved list,” it said.
The minister also informed the industry, financing from Power Finance Corporation (PFC), Rural Electrification Corporation (REC) and Indian Renewable Energy Development Agency (IREDA) will be structured in such a manner that lower rates of interest will be charged on the developers who will use domestically manufactured equipment. PFC, REC and IREDA are power and renewable energy sector financers.
The minister also urged the industry to not to import any equipment/materials/goods in which there is sufficient domestic capacity. He further said, for those goods and services wherein domestic capacity is not available and import is inevitable “then it should be allowed only for a fixed timeframe of 2-3 years”.
“During this period indigenous manufacturing of these items would be developed by an enabling policy/tax incentives/start-ups/vendor development/R&D support so that in the next 2-3 years all these items get domestically manufactured. Till such time goods so imported shall be tested in Indian laboratories for adhering to Indian standards and also to check the presence of malware,” the minister told the industry.
The minister also announced, prior approval of Ministry of Power/Ministry of MNRE would be needed for import of any power sector equipment.
“For promoting Make in India and reducing import dependency, it is essential that developers in the transmission, thermal, hydro, distribution, renewables need to join the national campaign of ‘Aatmanirbhar Bharat’ and wholeheartedly adopt the ‘Make in India’ policy of Government of India,” Singh said.
Barring a few, all privately-owned thermal power generation units roughly totalling to 40,000 Mw, constructed over the last decade are built on Chinese equipment. The public sector units have relied on in-house BHEL for supplying Boiler-Turbine-Generator (BTG) for their power generation units. However, thermal power units of leading private players such as Essar Power, Adani Power, Reliance Power, GMR Energy, Sterlite Energy have Chinese companies as their BTG suppliers, according to data by Central Electricity Authority.
At the same time, close to 75 per cent of the Indian solar capacity is built on Chinese solar cells and modules, owing to low cost. Indian electrical and electronics makers have been long complaining against the Chinese counterparts in Indian market for their below-market rates and security concerns. In the past decade, the import of Chinese electrical equipment has grown by 19 per cent, according to Indian Electrical and Electronics Equipment Manufacturers’ Association (IEEMA).