India might reduce the import tax on solar panels from 40% to 20% and rollback the goods and services tax on devices, according to three government sources. The move aims to compensate for the shortfall in local products and meet the rising demand for clean energy.
As per these sources, the nation’s renewable energy ministry had talks with the finance minister to discuss the same, but the decision has not been finalized yet. Moreover, the two ministries are also considering reducing the GST on solar panels to 5% from the previous 12% enforced in 2021.
If the new changes come into effect, it will provide a major boost to Indian solar power giants that are unable to meet project deadlines and complete contracts due to the shortage of local equipment.
In April 2022, India imposed a 40% import duty on solar panels and a 25% tax on solar cells to discourage imports and build self-reliance. However, domestic capacity is unable to meet the local demand, and energy companies are unable to meet project lines.
India’s current manufacturing capacity is 32 GW, however, the demand is for 52 GW capacity. Moreover, due to the rising demand for clean energy from commercial and industrial segments, sources suggest that the nation’s reliance on solar panel imports in the next 2 years would be approximately 8-10 GW.
PM Narendra Modi’s target of achieving 365 GW of installed solar capacity by 2031-32, further adds to the pressure. According to government sources, the proposed tax cuts have the potential to reduce the cost of imported panels by 20%, bridging the price gap between imported panels and domestically manufactured modules
Click Here for more updates
Resource: Reuters
Leave A Comment