India to raise tax for solar imports, reduce dependence over foreign supplies

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India will impose a 40 per cent customs tax adhering to the imports of solar modules which will be commencing from April 2022, and thereby reduce the inherent dependence existing over foreign supplies with an objective to strengthen the domestic manufacturing of the equipment, as said by the renewable energy ministry. 

The proposal has received the approval of the Finance Ministry, which constitutes 25 per cent customs duty over solar cells import, revealed the Ministry in a note which was released on the website. Though, there was no clarity regarding the duration for which the taxes will be applicable.

Earlier, in the middle of 2020, the taxes were proposed by India for solar power equipment imports, which was right during the border conflicts with China and Covid-19 virus related supply chain, which distributes nearly 80 per cent of India’s modules.

India has the vision of expanding its renewable power capacity five fold to 450 gigawatts till 2030. According to the ministry, around 280 gigawatts will be delivered by solar. The Centre deliberates on giving hold to the domestic solar manufacturing industry for reaching the target, and alongside, the tax plan is also a part of the broader push to help create employment and to revive the economic structure of the country which has been disrupted by the Covid-19 pandemic.

Presently, India levies a 14.5 per cent safeguard tax for importing solar cells and modules from most countries, which constitutes China and is subjected to expiry by July. The companies who are a part of the bidding related to project auctions need to consider the new tax plans proposed by the Government, revealed the ministry.

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