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India Scrapped Duty on Solar Modules: Relief for Indian Solar Producers

16 May 2018

India scrapped duty on solar modules, making it easier to import products after a sudden change in customs policy last year led to a logjam of shipments at Indian ports. Several consignments of solar modules, worth more than $150 mn in total, were held up for more than three months at ports after Indian customs' officials in Aug demanded that some of them be classified as "electric motors & generators", carrying a 7.5% import duty. Previously they were subject to no duty. The finance ministry reversed the policy last month, stating in a notice seen by Reuters that most solar modules should revert to their original classification & that no tax should be levied on them. Indian component makers have struggled to compete with Chinese CoS such as Trina Solar & Yingli & have sought anti-dumping duties as well as long-term safeguards. But the logjam of shipments at ports posed a headache for solar power producers & threatened to delay PM Narendra Modi's plan of nearly tripling the country's total RE capacity to 175 GW by 2022. The plan has spurred foreign invest. in the sector, with Japan's SoftBank & Goldman Sachs among others investing in solar projects in India. Any duty is bad news for solar power producers such as SoftBank-backed SB Energy but good for local solar component makers such as Indosolar & Moser Baer. The change in policy last August led to logjams as it was not immediately clear which modules belonged to the new classification. To ease the situation customs officials agreed to release shipments if importers paid a bank guarantee to cover any duty they may be required to pay. An executive at the Indian unit of Germany's Enerparc, which had 30 of its containers stuck at the port of Chennai, said there was still some uncertainty about the process even though the duty had been scrapped. "Looks like it will take a month before we get our money back, but we are happy that the issue has been resolved," Enerparc's Managing Director Santosh Khatelsal said.

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