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India: Finance Ministry Agrees to Customs Duty Proposal on Solar Modules

The Union Ministry of Finance has agreed to the Ministry of New and Renewable Energy’s proposal to impose basic custom duty (BCD) of 40 percent on solar modules and 20 percent on solar cells from 1 April 2022.

 

The proposal to impose BCD on solar cells and modules (without grandfathering of bid out projects) has been agreed to by the Ministry of Finance.

 

According to the memorandum, the rate of BCD will be zero on solar modules as well as cells till 31 March 2022 and from 1 April 2022 the rate of BCD will be 40 percent and 20 percent, respectively.

 

The Ministry has directed to inform all RE (renewable energy) implementing agencies and other stakeholders to take note of the duty rates and include provisions in their bid documents so that bidders take these into account while quoting tariffs, in all bids where the last date of bid submission is subsequent to (issue of) this memorandum.

 

It also stated that in all such bids, the imposition of BCD as per the trajectory will not be considered as change in law.

 

This assumes significance in view of India's ambitious target of 175 GW of installed renewable energy (RE) capacity, including 100 GW solar power by 2022. India has also set a target of 450 GW installed RE capacity by 2030.

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