MNRE Asks Solar Manufacturers for List of Goods for Exemption from Basic Customs Duty

The Ministry of New and Renewable Energy (MNRE) has issued a notification asking solar PV manufacturers and associations to provide the list of machinery and capital goods required for the inclusion in List 19 for exemption from Basic Customs Duty (BCD).

MNRE had asked solar PV manufacturers and associations to submit this list issuing a notification in February but due to the outbreak of the pandemic, the progress was stalled.

The Ministry of Finance, in its order dated June 30, 2017, had exempted certain capital goods provided in the List 19 from payment of BCD when imported into the country. The goods include capital goods required for the manufacturing of solar cells and solar modules.

After deliberation with the Ministry of Finance, the MNRE has decided to update the List 19, giving priority to high-value capital goods.

Keeping this in mind, the ministry has requested solar PV manufacturers and associations to provide a list of high-value machinery and capital goods used in the manufacturing of solar modules from cells, solar cells from wafers, and thin-film solar modules. The list has to be submitted by October 09, 2020. Based on the response, the ministry will take further action in the matter of BCD.

In the Union Budget this year, the government proposed a BCD of 20% on solar cells and modules imported to India. The duty earlier was nil. The imposition of BCD is considered as a necessary step to encourage the domestic manufacturing sector.

After the BCD announcement, the MNRE realized that manufacturers operating in special economic zones (SEZs) do not benefit from the levy and a large number of solar manufacturers are based in the SEZs. If the center levies BCD on products manufactured in SEZs, the purpose of the exercise would be lost. The ministry is finding solutions to exclude units in the SEZs from paying the duty.

Now the ministry is taking precautions to not impose any duty on equipment used in manufacturing.  Since, though the emphasis is on manufacturing locally, the majority of the capital equipment used in manufacturing is currently imported.