The union budget has tried to boost domestic production by increasing import tariffs on finished products such as PV inverters and solar lanterns.
Imported solar project components and structures will also be more expensive, but the price of the raw materials they are made from, such as coated steel for assembly structures, will help with an eight month suspension of anti-dumping duties.
Presentation of the budget 2021-22, Treasury Secretary Nirmala Sitharaman said tariffs on solar inverters and lanterns, currently levied at 5%, would rise to 20% and 15%, respectively, with effect from Feb.2, to level the playing field for Indian manufacturers.
The dominance of imported inverters in the market has been proven by an estimate by analysts Bridge To India, which proposed almost 80% of India's rooftop solar installations from July 2019 to the end of June, showed Chinese products.
The anti-dumping duties imposed on the Chinese, Vietnamese and Koreans Flat-rolled steel products clad or coated with aluminum or zinc alloys will be suspended from today until September 30th. The anti-dumping duties stipulate that such levies can be temporarily suspended for a maximum of 12 months without the government having given a reason for opening an eight-month window, apart from the desire to accelerate the implementation of solar projects.
The Indian rating agency Care Ratings estimates that assembly structures require 30 tons of tons Aluminum and galvanized flat steel for each megawatt of project generation capacity.
While developers can benefit from a temporary reduction in the cost of such raw materials for solar projects, the prices of the types of components they are made into will rise, at least for imports, as the budget removes the basic duty exemption for everyone Machines including prime movers, instruments, devices, components or auxiliaries used in solar project construction.
The basic duty exemption granted is not mentioned Solar modules and cells, however, are getting closer and closer with the 2022 deadline for the nationwide expansion of 100 GW solar.
Sitharaman highlighted the government's plan to incentivize higher quality solar production, stating: “Solar energy holds great promise for India. In order to build up domestic capacities, we will announce a phased production plan for solar cells and solar modules. “
The Treasury Secretary also announced a 5-year fund of INR 3.05.984 to help financially troubled power distribution companies. The money will be available for infrastructure projects such as the introduction of prepaid smart meters, the separation of feeders and system upgrades and will be tied to improved financial performance.
However, this handout was balanced by the fact that the minister presented plans to lift the monopoly of public and private energy companies. A framework is being developed, said the minister, to offer electricity customers a choice of electricity provider.
A hit for energy storage: lithium-ion battery parts that are not used for cell or protective circuit board assembly are to be cleared at 2.5% from April.
Sitharaman also confirmed plans for a green hydrogen strategy, saying: “Prime minister [Narendra Modi], announced plans for the start of a comprehensive national hydrogen energy mission in his speech at the third Re-Invest conference in November 2020. It is now proposed to start a hydrogen energy mission in 2021-22 to generate hydrogen from green electricity sources. ”
And there were budget increases of INR 1,000 crore and INR 1,500 crore for the Solar Energy Corporation of India (SECI) and the Indian Renewable Energy Development Agency (IREDA).
The budget was praised by solar manufacturers and developers alike for the announcements of the increase in import tariffs on solar inverters, capital increases for SECI and IREDA, the hydrogen energy emission and the reforms of the electricity sector.
However, PV manufacturers were disappointed with the lack of tariffs on imported solar panels and asked for more details on how the government's plan to promote higher-quality solar production would work.
Bharat Bhut, co-founder and director of module maker Goldi Solar, welcomed the increase in tariffs on imported solar inverters and lanterns, but said the industry has been demanding tariffs on imported modules since the last budget was announced. The elimination of tariffs in connection with the planned end of import security duties in July would put Indian solar manufacturers at a massive disadvantage, said Bhut.
Regarding the state incentive system for solar production, he said, “A casual mention of an additional allocation below [the] MORE [phased linked-incentive] Scheme was made. Even if there is still no clarity about what the program entails, we hope that local actors and the [solar manufacturing] Ecosystem. “
Chiranjeev Saluja, MD of the friendly solar cell and module manufacturer Premier Energies, sees the lifting of the duty exemption for imported solar project machines as a step backwards. “If the exemption is actually withdrawn, it can drive up equipment costs, which will act as a deterrent to new investments in the solar sector,” he said. “It will also drive up project implementation costs, which will affect the bottom line of companies involved in solar production.”
Gyanesh Chaudhary, managing director of Vikram Solar, said India's renewable energy industry, especially the solar industry, appreciates the efforts of the Indian government to help clean electricity especially during the pandemic, but has been hoping for more differentiated support from the latest budget. Among the missed opportunities, the MD named a possible duty exemption for manufacturers based in special economic zones; 5% interest subsidy on term loans and working capital; central upfront grant of 30% of the investment; an increase in export incentives from 2% to 8% as part of the waiver of duties or taxes on export products; a “super deduction” for R&D spending and access to a national clean energy fund.
“As a domestic solar manufacturer, we appreciate the government's focus on promoting the growth of solar production in India and hope for the new phased production plan for solar cells and solar modules [continues] to embody the intention, ”said Chaudhary.
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