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Ministry of Renewable energy plans to seek rollback of excise duty on imported silicon wafers

As Panchabuta has reported a couple of months back, the U.S. was aggressively trying to push  India to lift solar import restrictions on Jawaharlal Nehru National Solar Mission.

The mandatory use of domestic content for utility scale grid connected solar power  is a topic that has witnessed a lot of debate and there have been strong views on both for and against the same sometimes from two group companies each on one side of the same corporate house like Tata BP Solar for the domestic content requirement and Tata Power against the requirement saying it impedes them from choosing the best available equipment and vendor that suites their requirements.

In January this year, Ron Summers of lobby group Indo-US business council was pushing for the removal of technology limitations in Solar and last month, U.S. Commerce Secretary Gary Locke said he conveyed a “message of great concern” to Indian officials  about the country’s restrictions on imports of solar-power technology, rules that are making it difficult for American firms to enter one of the world’s fastest-growing solar-energy markets.

However, it seems like the ministry of new and renewable energy is commited on keeping the domestic content requirement in place with this report that says that the ministry of renewable energy plans to seek rollback of excise duty on imported silicon wafers, which it says will hit domestic manufacturers of solar modules.

“We are proposing to take up the issue with the finance ministry for removing this excise duty,” a senior official of the ministry of new and renewable energy said on condition of anonymity,according to the report.

The finance ministry has included silicon wafers in the list of 130 items on which excise duty will be levied. The excise duty has been fixed at 1%.

The official said his ministry was hopeful that the duty would be scrapped soon as it would hamper growth of the domestic industry.

Silicon wafers, the main raw material used in the manufacture of solar photovoltaic (PV) cells, are not produced in India. The excise duty on silicon wafers along with cess and other taxes is seen pushing up costs by 5-10% for domestic solar module manufacturers who are already facing competition from Chinese firms. The proposed duty could also discourage fresh investments from Indian and foreign firms planning to enter solar cell and module manufacturing in the country.

‘It’s extremely important that we get this set of duties reversed and rolled back in the interest of Indian industry”, said K Subramanya, CEO, Tata BP Solar .

The company, in a letter to the renewable energy ministry, has pointed out that while on the one hand the government is encouraging domestic manufacturers, on other, by imposing a duty on silicon wafers, it is disadvantaging them. Last week, the ministry had indicated that the government was considering banning or further restricting import of solar equipment for projects under the Jawaharlal Nehru Solar Mission , which envisages 20,000 mw of solar capacity by 2022. Currently, “70% of plants being set up in the first round of the mission are based on import of equipment and the number may surge to 80% if this duty is not rolled back,”  said an official from Tata BP Solar.

However as Panchabuta understands from unofficial sources, Moser Baer is likely to implement  upto 20% of the total capacity under the National Solar Mission and hence its highly unlikely that the above mentioned from Tata BP solar happens.

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