Energetica India nº91 July August 2020

advanced stages of construction and overall around 25 GW of projects have been awarded by government agencies so far. If these duties are going to be paid from the companies own pockets, than the overall impact would be around Rs 10,000 crore to Rs 12,000 crore. If some measures like grandfathering approach or some tariff formula will not be provided by gov- ernment agencies then the whole money will go directly from the companies’ equity and that much amount of money will be blocked for future development of the market. If companies go for compensation as well, it will take around 2-3 years time in regulatory approvals. Anil Joshi, Unicorn India Ventures The purpose of Grandfather clause is to allow reimbursement of custom duty on import of solar equipment. However this may not be applicable if the objective is to promote domestic pro- duction. It would be very unlikely that the Grandfather clause would be allowed considering the very purpose of imposing BCD. The problem need to be solved with proper representa- tion and workout PPA considering revised duty structure if im- ports still continues or cost increase due to higher input cost. K. R. Harinarayan, U-Solar Clean Energy The grandfather clause is applicable only for projects that are already in place so it will only be a temporary fix for pre-ex - isting contracts. However, if we are looking at the long term impact on the industry – say till 2-3 years till the cell manu- facturing capacity is able to meet the supply, the industry will struggle with meeting the competitive project costs. So there is really no relevance of the grandfather clause when taking into consideration that it is only applicable to very large projects, so it is actually detrimental to upcoming distributed captive solar projects. Shri Prakash Rai, Amp Energy India The “grandfather clause” in PPAs is basically an understand- ing between the developers and the government that their project cost has increased more than their allocated budget at the time of deal closure. This would be compensated via the Discoms. Now there is no clarity from MNRE on addition of such a clause in existing PPAs regarding Basic Customs Duty and there has been a precedent of a ‘grandfather clause’ not being honoured by Discoms which was a similar pass through clause for Safeguard Duty. Can safeguard duty and BCD will go hand-in-hand? Is this practically feasible as per the current Indian scenario? P. Vinay Kumar, Varp Power The Government has been giving all indications that both the duties would be levied. While, it is feasible what the industry craves for is certainty in taxation. Right now things are very fluid. Manoj Gupta, Fortum India Pvt Ltd For the impact on upcoming bids and projects, SGD is for one year so it will not be going to impact much, whereas, on BCD right now the percentage and time duration is not clear. However, again the industry will be expecting ‘change in law’ or for some formula which SECI has in last few bids already introduced for compensation in the form of tariff. Sanjeev Aggarwal, Amplus Solar Safeguard Duty can only be levied for a limited additional du- ration. It seems possible for both Safeguard Duty and Basic Customs Duty to be levied in tandem during this period. Anil Joshi, Unicorn India Ventures It is very unlikely that both Safeguard Duty and Basic Customs Duty go hand-in-hand. K. R. Harinarayan, U-Solar Clean Energy Yes, they can go hand-in-hand and it would actually promote Indian manufacturing. It would be sensible to leave the duty on cells as it is because this provides ample incentives for Indian module manufacturers - or to increase the duty on modules alone and not the cells, if possible (i.e. safeguard duty and basic customs duty on modules and only safeguard duty on cells). As India doesn’t have the capacity to meet the domestic needs for solar cells, therefore, imposing any custom duties on solar cells would be very unwise. Shri Prakash Rai, Amp Energy India With the surprise extension of Safeguard Duty @14.9% and 14.5% for the next year till July 2021, notifying an additional duty would create additional burden on the developers. Im- FEATURE STORY 28 energetica INDIA- July-Aug_2020 Manoj Gupta VP-Solar and Waste to Energy Business, Fortum India Pvt Ltd Anil Joshi Managing Partner, Unicorn India Ventures