Safeguard duty on Chinese solar equipment extended for one more year till July 2021

NEW DELHI: The government has extended the safeguard duty on Chinese solar power equipment by one more year till July 29, 2021 to help boost local manufacturing.

A duty of 14.9% will be levied on such imports for six months from July 30, 2020 to January 28, 2021 while the duty will be slightly lesser at 14.5% in the following six months, an official notification issued on Wednesday said.

Last week, the Directorate General of Trade Remedies (DGTR) had recommended continuation of the safeguard duty on solar cells and modules.

The country first imposed the duty in 2018 for two years to prevent dumping of Chinese solar equipment in the country, charging 25% in the first year, and 20% in the second.

The duty was charged on equipment from China and Malaysia where a lot of Chinese-owned solar companies are based. However, in the government’s latest notification, Malaysia has been exempted.

The notice does not mention any exemptions or a “grandfather clause”, which would have allowed renewable energy firms to claim reimbursements on the duty they have paid while importing equipment from China, where 80% of India’s solar equipment is sourced from.

Adding a “grandfather clause” to existing power purchase agreements would mean that there is an understanding between solar developers and the government that the project costs more than the allocated budget at the time of closing of the deal, and hence, compensation will be provided to the developers via the distribution companies.

Domestic solar equipment manufacturing wanted the safeguard duty to be extended for four years, but the DGTR said one-year extension would be adequate. Domestic solar manufacturing associations had welcomed this recommendation, but requested the rates to be increased to at least 50%.

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Developers were earlier expecting a basic customs duty (BCD) to replace the safeguard duty at the end of this month. Power and renewable energy minister RK Singh had recently told stakeholders that BCD of 15-20% on solar equipment would be imposed in August, which would double in a year’s time.

Although no official announcement has been made yet, industry stakeholders expect the BCD to be levied along with the safeguard duty.



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