The Union Power Minister, RK Singh, recently interacted with developers of generation and transmission projects in the power and renewable sectors. The minister reiterated the need for ‘Aatmanirbhar Bharat’ to promote the manufacturing of goods in India and create more job opportunities.

The minister noted that according to the data released by the Directorate General of Commercial Intelligence (DGCI), there is ample domestic manufacturing capacity for equipment like line towers, conductors, industrial electronics, transformers, cables, and insulators, among other things. But these things are still being imported. He said that to promote the ‘Make in India’ initiative, developers in the thermal, hydro, and renewables sectors should come together and join the national campaign of ‘Aatmanirbhar Bharat’ and adopt the ‘Make in India’ policy of the government.

Speaking about the power sector, the minister pointed out that power is a sensitive and strategically important sector as all the essential services depend on the power supply. The minister noted that power is a critical sector for the development of the country, and there is a need to reduce dependence on imports and strengthen domestic manufacturing capacity.

Singh underlined that imports should be allowed only for a fixed time frame of 2-3 years for those goods for which the domestic capacity is not available, and import is inevitable. During this time,domestic manufacturing of these items would be developed by enabling policy and tax incentives, vendor development, and research and development.

The minister also talked about the ministry’s proposal to impose Basic Customs Duty (BCD) beginning August 2020 on solar modules, solar cells, and solar inverters. He said that a clear path for the implementation of the duty would be declared so that there is no uncertainty regarding the government’s policy.

In the Union Budget this year, the government proposed a BCD of 20% on solar cells and modules. The main reason behind this step was to decrease the dependence on imports from China and increase the prices of solar imports, bringing it closer to domestic prices. Previously, Mercom has written about the impact of the duty on the solar sector in detail.

Also, the effect of imposing BCD on solar manufacturers in the Special Economic Zones (SEZs) of the country has not been thought through and could have severe negative consequences. In an in-depth analysis, we looked into the implications of the duty on these SEZs. Read the full report here.

He also said that the approved list of models and manufacturers (ALMM) would be implemented from October 01, 2020, as declared earlier. This step will make sure that all solar projects procure solar cells and modules from this approved list. The industry sentiment on ALMM has been mixed, with some rallying for the implementation of the order, while others are questioning the purpose it would serve.

The minister further added that financing from Power Finance Corporation (PFC), REC Ltd, and Indian Renewable Energy Development Agency (IREDA) would enable loans at lower rates to developers who use domestic equipment.

The minister also mentioned the constitution of a Foreign Direct Investment (FDI) cell or a Project Development Cell (PDC) in the Ministry of Power. The FDI cell will take care of the investments from countries that share their border with India. The Project Development Cell will make sure that the process of investments is accelerated. He added that the issuance of concessional customs certificates for certain import items would be discontinued, and the date will be notified separately.

During the interaction, the developers made some pertinent suggestions. They emphasized the need for clarity on new and old investments, encouraging R&D efforts, and maintaining the sanctity of contracts. They said that the import of certain critical equipment should be allowed for now, until the domestic manufacturing capacity is up and running. The developers from the generation and transmission segment, including developers from the renewable sector, echoed their support to contribute to domestic manufacturing and support the ‘Aatmanirbhar Bharat’ initiative.