The tax bureau under the Ministry of Finance of India has issued a notice to impose a safeguard duty (SGD) on imports of solar cells and modules to India for a period of one year. The order will take effect on July 30, 2020.
According to the Ministry of Finance, from July 30, 2020 to January 29, 2021, a 14.9% safeguard duty will be imposed on all solar cells and modules imported from China, Thailand and Vietnam, and from January 30, 2021 to July 2021. On the 29th, a 14.5% safeguard tax was imposed on the above-mentioned imported goods.
Regardless of whether it is assembled in modules or panels classified under tariff lines 85414011 and/or 85414012 in Chapter 85 of Schedule I of the 1975 Tariff Regulations, solar cells shall bear the guarantee tax.
This announcement is consistent with the recommendations of the Directorate General of Trade Remedies (DGTR) that from July 30, 2020, the safeguard duty on imports of solar cells and modules from India will be extended for another year.
According to industry sources, the government hopes to maintain the effective tax rate at 25% by 2021. Therefore, in addition to the guarantee tax, it is expected that the basic tax BCD will reach 10%. From the second half of 2021 to 2022, the industry expects that effective tariffs will increase by 40%.
India Solar Guarantee Tax
On July 30, 2018, India announced a 25% protection tax on solar cells and modules imported from China and Malaysia to protect domestic battery and module manufacturers. The tariff rate for the first year is 25%, and the tariff rate for the second year is gradually reduced. This rate is reduced by 5% every six months until the end of July 2020.
The General Administration of Trade Remedies launched a review investigation in March 2020 to see if it is necessary to extend the protection tax beyond its deadline after the Indian Solar Manufacturers Association (ISMA) filed an application. They seek to extend the tax for another four years. The domestic manufacturer that submitted the petition provided import data released from 2014-15 to 2019-20 (to September 2019) for this investigation.
Mercom India Research Institute previously reported that solar developers are working hard to compensate for the additional costs incurred by tariffs. Because the taxation has an adverse effect on their business, and therefore affects the development speed of the country’s projects.