Hike in custom duty, GST on solar modules increases cost

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Hike in custom duty, GST on solar modules increases cost

The Indian manufacturers sourced raw materials such as cells, polysiloxanes, and ingots from China, however, the duties coupled with higher raw material prices have increased the input cost for domestic manufacturers, making domestic panels costly.

Published Date – 05:34 PM, Sat – 15 April 23

Hike in custom duty, GST on solar modules increases cost

Representation image.

Hyderabad: The increase in the rate of tax on solar components from 5 percent to 12 percent and a 40 percent import duty on photovoltaic modules and 25 percent duty on photovoltaic cells is having a negative effect on growth and development in the renewable energy sector in the country. .

The Indian manufacturers sourced raw materials such as cells, polysiloxanes, and ingots from China, however, the duties coupled with higher raw material prices have increased the input cost for domestic manufacturers, making domestic panels costly. This is affecting the Ministry of New and Renewable Energy (MNRE) subsidized ‘Rooftop Solar Programme’ as the cost of installation has increased substantially.

According to the Telangana State Renewable Energy Development Corporation (TSREDCO) chairman Y Satish Reddy Center had launched the Rooftop Solar Program to encourage the installation of rooftop solar systems on homes and other residential buildings, however, due to increase in GST and import duties the cost of solar panels have gone up and people were now forced to shell out more. “This is discouraging people to opt for solar energy,” he said.

The Center mandating purchase of solar modules through the Approved List of Models and Manufacturers (ALMM) policy was also creating problems and discouraging the prospective customers, Satish Reddy said, adding that since for subsidized ‘Rooftop Solar Programme’ only ALMM approved modules could be used It has become difficult for the company to meet the demand.

Furthermore, domestic panel prices were on pace with or even higher than imported panels from China, prompting many developers to postpone projects that have become unprofitable due to the rates locked into current power purchase agreements, he pointed out.

Before the advent of Covid-19 pandemic about 40,000 mw solar projects were sanctioned, but after two years when it was supposed to take off, the center imposed customs duty and also increased the GST from 5 percent to 12 percent resulting in escalation of the cost of the project. “Developers who have applied for solar projects are back tracking as the project is not viable due to the increase in the cost of modules. If the Center wants to achieve the renewable energy goal it has to remove the customs duty and reduce the GST, only then the target can be achieved”, Satish Reddy said.

Apart from increase in import duties and GST, the solar modules have become expensive as the Center has reduced the subsidy from Rs 21,000 to Rs 14,588 per kw. Earlier, installation of a 3 kw solar power unit used to cost Rs 1,92,360 and the subsidy used to be Rs 57,360. Whereas, the consumers’ cost was Rs 1,35,000. However, now the same is costing Rs 2,06,400 and the subsidy has been reduced to Rs 43,764. The customers have to pay Rs 1,69,126, about Rs 35,000 more than the old rate.

TSRedco officials believe that until the Center reduces the import duties and GST, pushing the subsidized ‘Rooftop Solar Programme’ would be difficult for them.

Central Subsidy on Solar Panels:

1kW to 3kW: Rs. 14588 per kW

2.5kw : Rs. 36,470
3 kW: Rs. 43,764

4 kW : Rs. 51,058
5 kW: Rs. 58,352
6.5 kW : Rs. 69,293
10 kW : Rs. 94822
Above 3kW to 10kW : Rs. 14588 per kW for first 3 kW

Rs. 7294 per kW for remaining capacity

Resident Welfare Associations/Group Housing Societies (RWA/GHS) Rs. 7294/kw for common facilities up to 500 kWp @ 10 kwp per house.

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