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India Reducing Solar Panel Import Tax to Constitute Domestic Shortfall

India's present annual solar panel production capacity is 32 GW per year but the need is 52 GW as the demand for green, cheaper energy is increasing swiftly from corporate offices, industrial units and big factories.

May 31, 2023. By Nivedita Ojha

India is planning to cut down its import tax on solar panels by half and after abolish in goods and services taxes on the devices to make up a shortfall in local output amid increasing demand for renewable energy.

Also, the two ministries may make a recommendation to India's Good and Services Tax Council to lower the goods and services tax (GST) on solar panels to 5%, from the 12% imposed in 2021.

India levied a 40 percent solar panel import tax in April 2022 and a 25% tax on solar cells to discourage Chinese imports, in line with Prime Minister
Narendra Modi's plan to become more self-reliant and minimise emissions by leveling up renewable energy production.

India's present yearly solar panel production capacity is 32 GW per year but the need is 52 GW as the demand for green, cheaper energy is increasing swiftly from corporate offices, industrial units and big factories.

Though solar currently makes up over half of India's renewable energy capacity, domestic component supplies have been slow to pick up, and the industry was also spooked by higher import taxes.

The government officials, the necessity of changes in taxes, said India's reliance on solar panel imports in the next two years was "expected to be heavy at nearly 8-10 gigawatts per annum."
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