India’s solar tariff barriers.

Lenders are averse to financing the cost of tariff barriers imposed by India to check cheap Chinese imports of solar equipment. Banks and financial institutions are not providing loans for payment of safeguard duty on solar cells, modules, inverters etc importd from China. The Central Electricity Regulatory Commission (CERC) since July 2018 has made safeguard duty imposed on these items a part of the project cost by allowing a pass-through in tariff. Safeguard duty is a new element already acknowledged by CERC as a part of the project cost.
Similarly funding requirement for basic customs duty (BCD) on solar equipment imports is to be imposed shortly as a retaliation against the country’s northern neighbor. There is uncertainty surrounding the refund mechanism. No banks are willing to fund safeguard duty because of uncertainty of refund mechanism.
The quantum of these levies assumes significance as India has plans to become the world’s largest clean energy programme and of now debt financing for green energy projects is drying up. There is a diversion of equity meant for new projects, as developers are using it for financing their duty component. The issue of banks being unwilling to fund safeguard duty and BCD has been brought to the notice of the minsirty of new and renewable energy (MNRE) and will be followed up with the banks.
India has imported approximately $2.16 million worth of solar equipment in 2018-19. The safeguard duty is to be paid on these items @ 14.9% for the first six months and 14.5% for the remaining six months, according to the latest government order. Exporters will be given relief from the safeguard duty to te extent of anti-dumping duty paid on the components.