India’s Solar Manufacturing Could Finally See A Sustainable Renaissance with Import Duties

Despite numerous efforts by the government, the Indian solar manufacturing industry has not really seen any major investments in the last couple of years. The SECI tender which links setting up of manufacturing capacities along with the carrot of solar power projects has seen deferrals of more than six times over the last one and a half year without any takers.

There are numerous problems hampering the industry, the biggest one of which are the ad hoc measures being taken by the ministry to promote the industry. This has resulted in huge bad debts for the state-owned banks as some of the largest solar manufacturers in the industry such as Moser Baer, Indo Solar, and others have gone bankrupt. The others are also surviving by the skin of their teeth. The safeguard duties that were imposed in 2018 came as a lifesaver otherwise another 4-5 GW of solar manufacturing capacity would have gone kaput.

The import duties that has been proposed by the central government starting from April 2021 may finally spur the companies to make major investments into the industry. Note the recent reduction in corporate tax to just 15% may prod major foreign manufacturers such as First Solar, Trina Solar, and Jinko Solar to finally take the plunge and set up manufacturing. They would have a little incentive, as duties may go up to 30% in 2023 making it almost unviable to import any solar panels in India. The ministry has also proposed that starting from 2023, import duties will be also imposed on the components such as glass and EVA which would allow the development of a complete ecosystem of solar manufacturing similar to the phased manufacturing systems being done in other industries such as electronics.

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