India might lose nearly Rs 50,000 crore in foreign exchange

Image source - Engery World

The All India Solar Industries Association (AISIA) has said, "India will lose nearly Rs 50,000 crore in foreign exchange if solar developers are given exemption from basic customs duty on Chinese imports."

On July 1, Power and New and Renewable Energy Minister R. K. Singh had said, "Chinese imports for public solar projects will be exempted from duty if power purchase agreements are signed before implementation of duty, which is proposed from August 1 this year."

Safeguard duty is scheduled to end on July 31, the government has imposed a 20-25 percent basic customs duty on solar modules, and around 15 percent on cells, which will gradually go up to 40 percent for both.

AISIA Chairman Hitesh Doshi said, "We are happy that the government is taking measures to promote domestic manufacturing. But, it will have to also address the challenges which the domestic manufacturers are facing currently due to lack of clarity on the policy front and delay in implementation of duties, amongst others."

He noted and said, "there is nearly 25 GW of contracts which have been awarded for which the government has allowed developers to avail the pass-through benefits which will exempt imports from China from the duty."

Doshi added, "The government's decision on the "pass-through" clause will hurt domestic manufacturers as they will have no orders for the next 2-3 years. Already the COVID crisis has affected the manufacturers and this will add to our woes."

Usually, India imports nearly about 85-90 percent of modules from China among the other components.

Vikram Solar CEO Saibaba Vutukuri said, "India can save USD 18 billion of forex outflow by investing USD 4-5 billion in solar manufacturing, considering the government's plans to add large capacities of solar energy in the country."

He added, "The government will not lose any revenue if they give a pass through to domestic manufacturers. If developers get to pass through a benefit for purchasing components from domestic manufacturing, then we will add capacities."

Doshi further noted and said, "in the absence of the support from the government, not only will expansion capacities cannot take off, but the existing domestic solar manufacturing industry will also come to a standstill and cease to exist with more and more companies becoming bankrupt."

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