Reuters reported. India's renewable energy Ministry has held talks with the finance Ministry to approve its request to reduce import duty on solar panels from 40% to 20% , three sources said. The three sources declined to be named because the decision has not been finalized.
In addition, the two ministries are likely to make recommendations to the Goods and Services Tax Board of India to reduce the goods and services tax (GST) on solar panels to 5% from 12% in 2021, the sources said.
To discourage imports from China, India imposed a 40% import tax on solar panels and a 25% tax on solar cells in April 2022, which it said was in line with Prime Minister Narendra Modi's ambitious plan. Increase India's self-reliance and reduce emissions by expanding renewable energy. "However, domestic production capacity is insufficient." Imports are needed to fill the gap, "one of the sources said.".
The proposal comes as Mr Modi is eyeing a target of 365 gigawatts (GW) of installed solar capacity by 2031-32 as part of a green energy push that ranges from promoting electric vehicle to sustainable jet fuel.
India's finance Ministry did not immediately respond to an email seeking comment. A spokesman for the Ministry of Renewable Energy said it would comment as soon as possible.
It is understood that India's current annual solar panel manufacturing capacity is 32 GW per year, but the country's demand is about 52 GW, a huge gap, mainly due to the surge in demand for green, cheap energy in corporate offices, industrial units and large factories.
Although solar now accounts for more than half of India's renewable energy capacity, domestic module supply is growing slowly and the industry has been spooked by an increase in import taxes. India's reliance on solar panel imports is "expected to reach nearly 8-10 GW per year" in the next two years, said
a government official who stressed the need for tax changes. India imported $3 billion worth of solar panels in 2021-22, 92% of which came from China, according to
government data. The tax cut could reduce the cost of imported panels by a fifth, bringing them closer to the price of domestic components,
government sources said.
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