Making a major exception for Renewable Energy projects by Central Public Sector enterprises CPSEs), the Centre has exempted them from a 2020 financial rule brought in to restrict imports from firms based in China and other countries ‘sharing land borders’ with India.
CPSEs will now be able to import four categories of items freely from any country, including China, which heavily dominates the RE supply chain.
The exempted categories are 1) solar photo voltaic cells, wafers, EVA, backsheet and frames 2) inverters 3)trackers and 4) battery energy storage system components which include cells, battery packs and power conditioning systems.
An office memorandum issued by the Department of Expenditure dated August 4 informs of the exemption granted following a request from the Ministry of New and Renewable Energy (MNRE) and consequent deliberations by a Committee of Secretaries.
There are over 360 CPSEs in India and several of them like the National Thermal Power Corporation (NTPC NSE 1.00 %) are now working on RE projects as India looks to ramp up to meet ambitious targets.
This exemption from Rule 144 (xi) will, in effect, enable NTPC and other CPSEs engaged in RE projects to cut costs by directly importing from bidders/companies from China without the requirement of their registration in India.
The larger aim is to ensure a ‘level playing field’ with other private sector competitors who do not face such import restrictions. Rule 144 (xi) of the GFR was, however, flagged off by CPSEs as a difficult area for many RE supply chain related items.
In July 2020, soon after the Galwan clashes, India had tightened public procurement from firms based in China and other countries that shared a land border with it citing Mission Aatmanirbhar Bharat. The change was introduced through Rule 144 (xi) of the General Financial Rules that govern public procurement in India. Rule 144 (xi) to GFR directed that any bidder from a country –– for any goods/services including consultancy and non consultancy services and turnkey projects –– that shares a land border with India, will have to be registered with a competent authority.
China and other countries that shared a land border with it citing Mission Aatmanirbhar Bharat. The change was introduced through Rule 144 (xi) of the General Financial Rules that govern public procurement in India. Rule 144 (xi) to GFR directed that any bidder from a country –– for any goods/services including consultancy and non consultancy services and turnkey projects –– that shares a land border with India, will have to be registered with a competent authority.
Government ministries and departments apart, this applies to all autonomous bodies, public sector banks and financial institutions, PPP projects and so on.
NTPC, the state-owned power and energy behemoth, also came under the purview of GFR Rule 144(xi) among other CPSEs engaged in RE projects. However, since import dependence is still high in the RE sector and is mainly addressed through Chinese firms, the registration requirement put the CPSEs at serious pricing disadvantage vis a vis private sector competitors.
CPSEs have largely had to import the same through the engineering, procurement, and construction (EPC) contractors they engaged. This raised the overall project cost and hit the CPSEs considerably at a time when they are scaling up renewable energy projects.
The sector has also come under pressure with domestic manufacture of these items still not in tune with the market demand and the high import duties on items like solar PV cells.
The issue was taken up by the MNRE and discussed threadbare in rounds of inter-ministerial discussions this year, as reported by ET on April 9.
Besides GFR Rule 144(xi), the government has also been discussing various public procurement orders of 2017 issued by the Department for Promotion of Industry & Internal Trade (DPIIT) on similar issues raised by other ministries.
Source: PTI
