Uncertainty Around Proposed Basic Customs Duty of 20% on Imported Solar Cells and Modules
Safeguard duty of 15% until July 2020 already in place
In a surprising development, the government in an amendment has split the earlier tariff item 8541 40 11 (solar cells whether or not assembled in modules or panels) into two; 8541 40 11 (solar cells not assembled) and 8541 40 12 (solar cells assembled in modules or made up into panels) and proposed a basic customs duty of 20% on both the tariff items.
There is already an existing safeguard duty on these items. The safeguard duty for solar cells and modules imported from China and Malaysia from January 30, 2020, to July 29, 2020, is 15%.
There is a basic customs duty exemption for these items in place (notification 24/2005 Customs dated March 1, 2005), which has added to the confusion whether the newly proposed customs duty kicks in immediately or if it would happen only after the earlier notification is amended to exclude the solar cells and modules from customs duty exemption.
At the moment, it is unclear how all this will play out. We will follow-up with more details as they emerge.
Mercom had earlier reported the Minister of Power R.K. Singh had proposed that basic customs duty (BCD) be imposed on imported solar cells and modules from April 2021 in a letter to the finance minister of India. The letter had a proposal of incremental year-wise custom duty slabs that should be imposed on these products. The proposed duties range from 10% from the first year up to 30%, in the third year. The imposition of BCD, as per the Ministry, is expected to give a boost to the domestic solar cell and module manufacturing industry. However, the letter also asked the finance ministry to exempt products such as wafer, EVA, glass, silver, paste, frames, and structures, that are used to manufacture modules in India until December 31, 2023. After which 15% BCD could be imposed on these products as well. Also, the minister of power recommended there be two different BCD tariff heads for solar cells and solar modules.
This proposal follows the Budget 2020, which was presented on February 1st.