As the government plans to replace safeguard duty on cells and modules imported from China and Malaysia with 20% basic customs duty by July, domestic solar cell and module makers in the Special Economic Zones (SEZ) have raised concerns saying this would be detrimental for overall product cost on domestic sales.
The government is planning to replace safeguard duty introduced in July 2018 with basic customs duty with the view to protect domestic manufacturers in the next 2-3 years over a phased manner.
Under safeguard duty, the SEZ manufacturers were treated on par with domestic tariff area (DTA) manufacturers, but that will change under BCD. Manufacturers located in SEZ are of the view that the viability of their operations will be impacted due to this as their buyers in the DTA will have to pay BCD. SEZ-based manufacturers account for 60 percent of the total solar cell manufacturing in India and around 50 percent of solar module manufacturing.
As on date, there are no BCD on solar cells and solar modules. If BCD is imposed industry players fear it will impact businesses who have units in the SEZs thereby increasing the overall product cost. Therefore, the domestic players located in SEZ are requesting the government that there be a level playing field for them and units located in DTAs with regards to duties and taxation.
The government had imposed 25 percent safeguard duty on the said items between July 30, 2018, to July 29, 2019. The duty gradually lowered to 20 percent between July 30, 2019, to January 29, 2020, and further to 15 percent between January 30, 2020, to July 29, 2020.
As per reports, the installed capacity of solar cell manufacturing is more in SEZs than those units in DTAs. However, the total module manufacturing capacity of units is lesser than those in DTAs.
