The renewable energy ministry held talks with the finance ministry to reduce import duty on solar panels by half
As per the latest report from Reuters, the Indian Ministry of New and Renewable Energy (MNRE) is mulling over the idea to cut the import tax on solar panels from 40% to 20%. MNRE officials recently held talks with the finance ministry to approve its request, claimed the report.
Furthermore, in response to the increasing demand for renewable energy and a shortage in domestic output, the government is looking for a reduction in Goods and Services Taxes (GST) on renewable energy devices. The report anticipated that the two ministries may make a recommendation to India’s Good and Services Tax (GST) Council to lower the GST on solar panels to five per cent, from the 12 per cent imposed in 2021.
It is estimated that the change in import duty will act as an advantage for solar power companies like Tata Power, Adani Green, and Vikram Solar. These companies secured solar power supply contracts by offering competitive tariffs; however, they encountered difficulties in fulfilling the contracts due to local equipment shortages.
In April last year, the centre imposed a 40% solar panel import duty and a 25% tax on solar cells to discourage imports from China and move towards self-reliance. But as India has the target to gain 365 gigawatts (GW) of installed solar capacity by 2031-32, the government is now contemplating reducing the import tax on these items, thus easing the challenges in sourcing domestic equipment for these projects. The aim is to bridge the supply gap, boost the production of these devices domestically and enable companies to meet the growing demand for solar power.
It must be noted that currently, India’s annual solar panel manufacturing capacity is 32 GW. But it satisfies only around one-third of the total demand for green energy as more and more commercial units including factories, industrial units and corporate offices are hopping into the bandwagon of renewable energy.
