Solar Manufacturers in SEZ Seeks Equalization Levy under AatmaNirbhar Bharat Abhiyan

Solar equipment makers in SEZ sought government support to provide equalization levy on their products supplied to the domestic market, like manufacturers in DTA region. The move came as the government is considering imposing basic customs duty (BCD) to discourage imports. If the BCD be implemented, it would also apply on solar manufacturers in the SEZ.

August 08, 2020. By Manu Tayal

The solar equipment manufacturers in SEZ area sought government support to provide equalization levy on their products supplied to the domestic market, like manufacturers in the DTA region.

The move came as the government is considering imposing basic customs duty (BCD) to discourage imports from China. If the BCD be implemented, it would also apply on solar manufacturers in the SEZ zone.

Thus, in order to draw attention of the Prime Minister and the key policy decision makers to address various policy hurdles that manufacturers in SEZ are facing, threatening job losses and their very survival, a press meet was organised by leading solar manufacturers in the SEZ, including Renewsys, Vikram Solar, and Webel Solar.

During the meeting, Avinash Hiranandani, Global CEO and Managing Director, RenewSys said that “solar industry is bleeding and we strongly recommend the government to immediately levy Basic Custom Duty on imports of cells and modules while levying Equalization Levy on manufacturing units located in SEZ. While India has been focusing on creating a market for solar power, now is the time to focus on domestic manufacturing, which would help conserve substantial foreign exchange and create at least 3,00,000 to 4,00,000 jobs in the next 2-3 years.”

The manufacturers said India is planning to achieve an ambitious target of 100 GW of solar deployment by 2022 as a part of National Solar Mission. It is noteworthy that the 33 GW capacity of solar power deployment so far, out of the 100 GW target, has been largely attained using imported solar cells and solar panels from China despite India having had enough module manufacturing capacity.

The industry players observed that outflow of USD 18 Billion of forex reserves can be avoided if India deploys the domestic projects based on indigenous cells and modules over next 4-5 years.

“It is no doubt that India has emerged as a strong market for solar power equipment in the last 5 years. With the Government setting ambitious targets of 175 GW by year 2022, it is important to ensure a conducive policy environment in order to achieve it,” said S.L. Agarwal, Managing Director, Webel Solar.

Explaining more about the issues, Saibaba Vutukuri, Chief Executive Office, Vikram Solar said that “there was an apprehension that manufacturing units located in SEZ have availed certain benefits in past hence if Basic Custom Duty is not levied while clearing the products from SEZ to DTA it will put manufacturing units located in DTA at cost disadvantage. In order to address this issue Government is comprehending to levy ‘Equalization Levy’, whenever solar cell and modules manufacturing units located in SEZ clear their goods to DTA. Equalization levy will set off the benefits availed by manufacturing units located in SEZ while setting up the facilities. We second this proposal for imposition of an Equalization Levy, as it will ensure that the manufacturing units located in DTA and SEZ are placed on similar footing in terms of custom duties.”

In a joint statement the players said “In the absence of a level playing field, domestic manufacturers in SEZs will have to shut shop and may see job losses in tune of 15,000 people.”

With 63 percent cell manufacturing capacity and 43 percent module manufacturing facility located at the SEZs, solar manufacturers expressed that while BCD is a welcome move, the government must take necessary steps to protect the investments already made by the manufacturing facilities located in SEZ, hence ‘equalization levy’ was a fair solution.

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