There have been significant delays in implementation of such ‘change in law’ pass-through for the affected IPPs in the past
New Delhi: As the 15 per cent safeguard duty on imports of solar cells and modules import is set to cease in July 2020, industry analysts seek clarity for a pass-through of customs duty impact for projects already bid out last year, which are likely to be executed after July.
They added that there have been significant delays in implementation of such ‘change in law’ pass-through for the affected IPPs in the past.
According to Girishkumar Kadam, sector head and vice-president, ICRA, a clarity on long-term policy on customs duty along with other concessions after July this year is also awaited.
“The long-term policy clarity on customs duty trajectory post July 2020 as well as other concessions is now awaited to promote domestic manufacturing till scale and cost competitiveness improves for domestic original equipment manufacturers (OEMs),” added Kadam.
ICRA said that the government has recently increased its policy focus on domestic manufacturing in a move to support domestic module manufacturers.
Sabyasachi Majumdar, group head and senior vice-president, ICRA said, “Business outlook for domestic solar OEMs remains strong over the medium term, given the greater thrust towards encouragement of domestic manufacturing. This is evident from the schemes such as the 12 GW CPSU scheme, KUSUM scheme, and the domestic manufacturing linked orders.”
He added that this is likely to result in a favourable order pipeline of about 35-40 GW over the next three to five year period for domestic solar players. However, timely implementation of the notified schemes through time-bound award of projects and availability of power supply agreements with the ultimate off-takers remains critical.
“Further, the lack of scale and backward integration in the solar module manufacturing process for a majority of module manufacturers are likely to pose constraints,” Majumdar said.
The government has formulated various schemes in the past one year such as the Central Public Sector Undertaking Scheme which envisages installation of 12 GW solar power capacities by FY23 with a defined sourcing requirement from domestic module manufacturers.
Further, the railways ministry has a plan to meet 10-15 per cent of its energy requirements through solar power over the medium term by setting up about 3 GW of projects on barren land available alongside the railway tracks as part of the ‘Make in India’ initiative.
India’s solar sector has been import dependent with respect to procurement of cells, modules and other equipment given the cost competitiveness of imports as compared to domestically manufactured products.
Source: energy.economictimes.indiatimes
