India to stick with plan to tax imports of solar equipment

India is sticking to its plan to tax imports of solar cells and modules from April 1 despite rising costs as it seeks to build a domestic manufacturing industry to support a record growth in renewables installations. 

The country will levy 40% basic customs duty on imports of solar modules and 25% on solar cells from the start of the next financial year, according to the annual budget presented by Finance Minister Nirmala Sitharaman on Tuesday. 

The import taxes help domestic manufacturers and reduce dependence on imports from China, which accounts for nearly 80% of the country’s supplies. Delivery disruptions during the pandemic and soured relations with its northern neighbor have given a boost to such protectionist measures. The tariffs, which come at a time when module prices have already soared, are set to make clean power more expensive and deter its faster adoption in an economy that relies predominantly on fossil fuels.  

The nation plans to more than quadruple its renewable power capacity to 450 gigawatts by the end of this decade and is building a domestic industry to reach the milestone. The impending tax has led to a surge in imports before the tariffs kick in.