Budget 2021 announces phased manufacturing plan for solar gear, raises import duty

• To build up domestic capacity, we will notify a phased manufacturing plan for solar cells and solar panels, said Sitharaman

• Exemption to all items of machinery, instruments, appliances, components or auxiliary equipment for setting up of solar power generation projects is being rescinded

New Delhi: In order to give a fillip to domestic manufacturing capacity under the aegis of the Atmanirbhar Bharat Abhiyan, Finance Minister Nirmala Sitharaman has announced a phased manufacturing plan for solar cell and modules on Monday while presenting Budget 2021-22. "… we have already acknowledged that solar energy has huge promise for India. To build up domestic capacity, we will notify a phased manufacturing plan for solar cells and solar panels," said Sitharaman. 

Currently, India imports around 80 percent of the solar cells and modules required within the country from China. In the wake of an escalation in border disputes and confrontations with China, the government has decided to tighten the noose around Chinese imports as part of an economic response. And therefore, the Centre is placing a lot of focus on building domestic manufacturing capacity so that the country's dependence on cheap Chinese imports is reduced.

Increased import duty on solar inverters and lanterns

In her Budget speech, Sitharaman also proposed to increase import duty on solar inverters and lanterns from the current 5 percent to 20 percent and 15 percent, respectively. Earlier, Power Minister RK Singh had said that the government would impose a basic customs duty on solar cells and modules, and the solar industry was hoping that an announcement in this regard would be made in the Budget.

In addition to an increase in import duty, exemption to all items of machinery, instruments, appliances, components or auxiliary equipment for setting up of solar power generation projects is being rescinded. 

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State-owned nodal organisations Solar Energy Corporation of India (SECI) and Indian Renewable Energy Development Agency (IREDA) will get Rs 1,000 crore and Rs 1,500 crore, respectively, said the minister. These two organisations are important as the Ministry of New and Renewable Energy (MNRE) conducts solar and wind auctions through both of these agencies.

Sitharaman also announced plans to launch a National Hydrogen Mission in FY2021-22 to place emphasis on production of Hydrogen from green sources, without elaborating on the details.

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