The Ministry of New and Renewable Energy has asked solar manufacturers to provide a list of machinery and capital goods that should be exempted from basic customs duty (BCD), which signifies that the duty may soon be levied. “Ministry of New and Renewable Energy had consultation with Ministry of Finance and Department of Heavy Industry regarding updation of this list,” said the notice by the Ministry. Domestic manufacturers had anticipating the duty on solar equipment for a long time. Minister had told reporters in June that basic custom duty was likely to be imposed from August 1 to prevent the dumping of Chinese goods and protect national interests, where 80% of solar equipment is sourced from.
Due to disagreements over the “Grandfathering” clause which would provide exemptions to Power Purchase Agreements already signed. Adding “Grandfather clause” to existing power PPAs would mean there is an understanding between solar developers and the government that the project costs more than the allocated budget, hence, compensation will be provided to the developers via the distribution companies. Instead, a formula based on the coal cess will be implemented to recover the losses incurred due to the safeguard and basic customs duties, Minister said. It is expected to provide relief to the generators, but, consumers might bear the immediate brunt of such a policy.
