Domestic solar cell and module manufacturers have urged the government to impose an ‘equalisation levy’ so that units located in ‘special economic zones’ (SEZ) are not hurt by the government’s decision to impose basic customs duty (BCD) on solar imports.
The industry said if there is absence of a level-playing field, domestic manufacturers in SEZs will have to shut shop and may see as many as 15,000 job losses. SEZ manufacturing units are deemed at par with foreign companies and hence customs duty is imposed on them too.
Centre is mulling to impose a 2 per cent equalisation levy to incentivise SEZ manufacturers for transactions with domestic customers.
“Equalisation levy will set off the benefits availed by manufacturing units located in SEZ while setting up the facilities. We second this proposal for imposition of an Equalisation Levy, as it will ensure that the manufacturing units located in DTA and SEZ are placed on similar footing in terms of custom duties,” said Saibaba Vutukuri, Chief Executive Office, Vikram Solar.
According to industry data, out of the 3,100 Mw of cell manufacturing capacity in India, 2000 Mw is situated in SEZ. In module manufacturing, 3,800 Mw out of the 9,000 Mw is inside SEZ.
The Ministry of New and Renewable Energy (MNRE) has proposed 20 per cent BCD on imports of solar cells and modules. This move is part of the country's recent efforts to ban imports from China. Close to 80 per cent of India’s solar capacity is built on Chinese solar gears.
At the same time the Directorate General of Trade Remedies (DGTR) in a recent order suggested extension of safeguard duty levied on solar imports coming from China. The current safeguard duty on Chinese imports is 15 per cent, due to expire this month. DGTR has suggested 14.9 per cent duty for one more year. This was in response to a petition by several domestic solar manufacturers asking for a level-playing field against low-priced Chinese imports.
The industry is therefore also concerned about supply chain disruption of wafers from China due to recent import ban. Wafers are an important component for solar cells and modules. However, the industry is expecting policy push for wafer and ingot manufacturing in India.
“Government is pushing for an ambitious policy for silicon wafer manufacturing in India and we are hoping it will come soon,” said Avinash Hiranandani, Global CEO and Managing Director, RenewSys. He also said the price difference between Indian and Chinese solar gears is 20-25 per cent and that is mostly due to low interest rates in China.
“Domestic lenders should consider lower rates for the solar manufacturing sector. Government should also reduce the capital cost for solar manufacturing,” said Vutukuri.
The manufacturing industry said, by pushing indigenous manufacturing, the country can avoid outflow of USD 18 Billion of forex reserves.