Government Fixes Misclassification Issue of Solar Modules at Ports

Providing relief to solar project developers in the country, the government has put in place the much-required remedial measures to resolve the issue of misclassification of solar modules at country’s ports.

This would help in avoiding the demurrage and detention charges incurred while importing the solar modules.

Addressing the Rajya Sabha, Minister of Power, R. K. Singh said, “The Ministry of New and Renewable Energy (MNRE) has received representations conveying that consignments of solar panels imported from other countries are held up at some of the ports due to customs classification issues resulting in disputes regarding the applicable rate of basic customs duty on the imported solar panels”.

Singh added that the government has given its permission to the bonding of cargos under Section 49 of the Customs Act. The section pertains to warehouse storage of imported goods for which clearance is pending.


Under Section 110A of the Customs Act, the solar panels have also been allowed the benefit of provisional release. Section 110A pertains to provisional release of goods and documents seized, pending adjudication.

Mercom had previously reported on how the misclassification of solar modules by port authorities has created confusion and delays in the Indian solar sector which is already besieged by a range of challenges. Port authorities across the country have begun demanding a higher duty on imported components before they are released from the ports.

In a recent site visit to the Pavagada Solar Park, Mercom’s team found that a few projects that had been nearing completion are now delayed because the necessary modules have become stuck at the Chennai Port due to the sudden imposition of the 7.5 percent customs duty. An onsite source told Mercom that one of the developers at the Pavagada Solar Park had paid the extra cost and their modules were now on the way, as the project is expected to be connected to the grid by December.

“This is a welcome move as developers are facing extremely competitive solar auctions, which means returns are low and every penny counts. Hopefully this issue is resolved once for all,” said Raj Prabhu, CEO of Mercom Capital Group.

In November 2017, customs officials had blocked more than 1,000 containers of solar panel shipments citing misclassification.

Mercom recently reported that import and export activity in the Indian solar sector dropped by $464.15 million (~₹30 billion) quarter-over-quarter to $776.08 million (~₹49.9 billion) in the third quarter of calendar year 2017. By comparison, the second quarter of calendar year 2017 registered import and export activity worth $1.24 billion (~₹79.9 billion). The drop reflected a general slowdown in project installation activity caused by a number of market uncertainties during the period.