Government can defer tariffs on imports of solar equipment, extend project deadlines

The government is considering delaying the imposition of tariffs on imported solar equipment or allowing an extension of the completion deadline for domestic solar projects that face supply uncertainties from suppliers in China, a Energy and Renewable Energy Minister RK Singh told ET.

“We received a request that there is this problem (Chinese companies are delaying supplies citing force majeure). Of course my focus is ‘buy Indian’. But there is not enough inventory for it. buy Indian, ”Singh told ET in an exclusive. maintenance. “We are therefore considering an extension of the deadline or an extension of the homework. We have taken no position.”

National solar companies allege that Chinese companies are taking advantage of the proposed 40% tariff on solar equipment from April next year, forcing Indian companies to pay more than 1.5 times the contract originally signed.

The supply of equipment from China also remains uncertain as the Chinese government has imposed severe power cuts on its industries, resulting in a sharp rise in the cost of solar panels and the retraction of the binding contract signed, they said.

China’s travel ban on Indian companies adds to the woes of Indian companies – senior executives at Indian solar companies are unable to visit suppliers in China for negotiations, insiders said. ‘industry.

Rising prices for commodities such as polysilicon, copper, steel, aluminum, silver, and increased ocean freight led to price hikes for solar equipment to record highs earlier this year. year.

The contracts for the next solar power plants do not provide for a price variation, and any increase in the cost of inputs will have to be borne by the companies. In accordance with the contracts, the price change can only be authorized in the event of a change in law or force majeure.

Developers of solar energy projects have written to the Ministry of Renewable Energy asking for an extension of the tax deadline of one year.

“The imposition of the BCD will virtually be the death knell for developers if it is not extended,” the Solar Power Developers Association recently told the Renewable Energy Ministry in a letter.

“It is becoming increasingly unsustainable to do business for solar energy developers. Imposing a 40% BCD (total rises to 61%, including GST and cess) on April 1, 2022 will make matters worse. Chinese suppliers are benefiting from this. delay and forcing the Indian PPI to pay more than 1.5 times the original signed contract. Thanks to this delay, we only benefit Chinese companies, ”the letter said.

The association said extending the BCD tax by at least one year would be a “win-win situation as domestic manufacturing will expand and Indian solar developers will not have to depend on Chinese imports.”

The expansion would not affect the manufacturing of solar equipment offered under a production-related incentive program, as the auction is expected to close this month and the facilities have a minimum gestation period. 18 months, he said.

The National Solar Energy Federation of India last month called for the deferral of the BCD on solar cells and modules for six months, until October 1, 2022.

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