According to the current proposal by the ministry of new and renewable energy, the value addition done by units in SEZs will be charged BCD. Units not in SEZs will not face such a charge.
Industry executives said 63 per cent of solar cell and 43 per cent of solar module manufacturing capacity are located in SEZs.
SEZ units were allowed a one-time exemption on import duty on capital goods required to manufacture solar gear. They also enjoyed a rebate on the duty levied on electricity that was consumed for the operation of their manufacturing units which will not be affected by the BCD. The electricity duty rebate works out to be Rs 17 per kilowatt peak (kWp). One solar panel with a peak power of 1kWp functioning at its maximum capacity will produce 1kWh.
Saibaba Vutukuri, CEO of Vikram Solar, estimates that 300,000 to 400,000 jobs will be created over the coming years as companies start manufacturing in India.
However, the present solar market still depends heavily on China. “33 GW capacity of solar power deployment so far has been largely attained using imported cells and panels from China, despite India having had enough module manufacturing capacity,” he said.
Companies are requesting either a partial or complete exemption to the duty. “This would also give manufacturers time to set up capacity outside the SEZs and also help the sector to prepare,” Pinaki Bhattacharyya, CEO of Amp Energy India, told ET.
SL Agarwal, MD of Webel Solar, said, “This measure would be counter-productive and harm the very industry for whose protection the measure is intended to be imposed.”
On Thursday, power and new & renewable energy minister RK Singh told reporters that the government plans to levy 15-20 per cent duty that would rise to 40 per cent in a year’s time, to reduce dependence on China. About 80 per cent of solar imports come from China.