By doing away with the customs duty on solar tempered glass, the government has bettered the competitiveness of domestic players marginally as compared to the ones imported
Adani Group, Waaree Group, Vikram Solar and Tata Power Solar are among the top few domestic solar manufacturers who would stand to benefit from the abolition of 5% customs duty on solar tempered glass as announced in the budget. Their capital expenditure cost would reduce by 3%.
According to the Budget 2018 proposal, the Ministry of Finance wants to do away with customs duty on solar tempered (anti-reflective coated) glass meant for manufacturing solar cells, panels and modules in India. Currently, 5% customs duty is levied on the same.
"We (the domestic players) work on wafer thin margins. Abolition of customs duty will make it more economical to manufacture the module. Solar tempered glass accounts for 10% of total production cost. Elimination of customs duty on the solar tempered glass will not have an effect on per unit cost of energy production, but it will make solar module production more competitive," said Sunil Rathi, director (sales & marketing), ?Waaree Group.
Explaining the benefits to the solar players, Sandeep Upadhyay, managing director and chief executive officer of Centrum Infrastructure Advisory Limited, said, "Adani Group (Mundra Solar PV Ltd), Mumbai-based Waaree Group, Kolkata-based Vikram Solar and Tata Power Solar are the top tier-I players who would stand to gain from this move. There are other domestic players too who would benefit moderately, but do not belong to tier-I category."
The tier-I solar manufacturers are those who adhere to certain production quality standards required.
These four companies combined have a cumulative production capacity of 6 gigawatt (GW) and the rest of the players put together have a manufacturing capacity of 3 GW.
The government, by doing away with the customs duty on solar tempered glass, has bettered the competitiveness of domestic players marginally as compared to the ones imported by other renewable energy players as the manufacturing cost has reduced.
However, the domestic solar manufacturers are looking forward to the imposition of safeguard duty of 70% on imported solar photovoltaic panels which will prove to be a major booster for Indian solar manufacturers.
Last month, Crisil Ratings had highlighted in a report that levying 70% provisional safeguard duty on imported solar panels and modules from China and Malaysia will put around 3 GW of solar projects under implementation--worth over Rs 12,000 crore--at risk.
Solar modules account for around 55% of a solar project's cost, and 80-85% of them are imported from China and Malaysia.
Imposition of 70% safeguard duty will inflate solar project cost by around 25% and increase tariff to Rs 3.75 per unit from around Rs 3 estimated earlier, thereby, giving a fillip to domestic solar energy players.
RAY OF HOPE
By doing away with the customs duty on solar tempered glass, the government has bettered the competitiveness of domestic players marginally as compared to the ones imported
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