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The center has removed the customs duty applicable on imported solar panels which would provide a positive encouragement to solar power developers in the country.
The Central Board of Indirect Taxes and Customs (CBITC) has given exemption from customs duty to the imported solar modules by reclassifying. CBITC has classified solar panels as “electrical motors and generators” under the Customs Act (HS Code 8501) in the year 2016 and the items under this category are charged with 7.5% customs duty.
This move was challenged by many solar project developers in court and many hundred containers of solar panels were lying at ports for weeks. 90% of the solar panels used in India are shipped in from China, Malaysia, and Taiwan.
With the latest change, the solar modules and panels with bypass diodes have been put under the code 8541 and will be charged not import duty. The modules and panels with blocking diodes or those with blocking and bypass diodes will still under code 8501 be charged import duty as before.
The developers were facing difficulties and the customs duty is another incremental cost. Indian Solar manufacturers association (ISMA) is expected to put a fresh application to check if the imported panels should be subjected to a safeguard duty. The government agency had initially asked to levy a 70% safeguard duty on the imports. However, a project developer had got a stay on this order.
In the absence of any clarity regarding levying of these duties, there is already a sudden increase seen in bid rates and a decrease in the number of bids by project developers.