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Basic Customs Duty on Chinese solar imports delayed

Wednesday, 05 Aug 2020
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The basic customs duty on solar imports from China, which was supposed to be implemented from 1 August 2020, will be delayed for another two to three weeks, as per an industry meeting with the Ministry of New and Renewable Energy (MNRE).

MNRE has been in talks with the Ministry of Finance over the customs duty for nearly three weeks now.

The power purchase agreements (PPAs) which were already signed remain the biggest issue between the ministries.

The projects signed before 1 August 2020 will be eligible for a ‘grandfather’ clause, which will allow renewable energy firms to claim reimbursements on the duty they have paid while importing equipment from China.

Adding a ‘grandfather’ clause to the existing power purchase agreements (PPAs) will mean that there is an understanding between solar developers and the government that the project costs more than the allocated budget at the time of closing of the deal, and hence, compensation will be provided to  developers via distribution companies.

The industry also raised issues about the extension of project deadlines which are currently under construction.

MNRE has marked a 68 day period as the official lockdown timeframe, and an extension of this along with an additional 30 days will be granted. However, stakeholders have requested for at least a six month extension on deadlines, citing the various lockdowns imposed across different states and further problems with procurement of labour.

A duty of 14.9 percent will be levied on Chinese imports for six months from 30 July 2020 to 28 January 2021, while the duty will be slightly lesser at 14.5 percent in the following six months.

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