Government clears confusion about custom duty on imported solar panels

A sudden change in customs policy in 2017 led to a logjam of solar module consignments at Indian ports. Modules worth more than $150 million were held up for more than three months at ports after Indian customs’ officials in August 2017 demanded that some of them be classified as electric motors and generators, which carry a 7.5 per cent import duty. This duty would have had a profound impact on the Indian solar market, as 90 per cent of solar panels used in India are imported mostly from China, Malaysia, and Taiwan.

Several developers challenged the move and the government finally reversed the policy in April 2018, stating that most solar modules should revert to their original classification and that no tax should be levied on them. This will have a favorable impact on solar tariffs which have, off late, gone up.

However, customs duty was only one of the incremental costs that developers were facing. Indian agencies until recently were conducting anti-dumping investigations into imports from China, Malaysia and Taiwan. While the investigations were wrapped up prematurely after the Indian Solar Manufacturers’ Association (ISMA) withdrew its petition calling for the probe, it is now expected to file a fresh petition.