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Confusion over customs duty blindsides solar energy firms

Solar energy companies are worried about an ambiguity in the levy of customs duty on the import of solar modules. Imported modules, hitherto fully exempt from any duties, could face a 7.5% duty, according to a notification from the customs department at the largest container port in the country.Such a duty would increase the cost of upcoming projects and threaten the profitability of solar energy producers.Containers of modules for several solar energy companies are stuck at the Jawaharlal Nehru Port, called Nhava Sheva, pending submission of a bank guarantee and a bond under provisional assessment, according to three firms that Mint spoke to.Solar modules, essentially photovoltaic cells connected in a series, are a key component for solar plants and account for almost 60% of the project cost.

The cost of solar photovoltaic modules has been on a downward trend because of oversupply in China. Falling prices and the waiver of duty have helped solar companies win projects at low tariffs and also provided a shot in the arm for the government, which has pushed renewable energy to the top of its energy security agenda.