India ups economic ante, rolls out measures to discourage Chinese imports in power sector

• The government is set to place more tariff barriers, subsidise financing for procurement of equipment from domestic manufacturers, vet imports from "prior reference countries,"
• Singh asked the power sector to not import any equipment/materials/goods in respect of which there is sufficient domestic capacity

New Delhi: In the backdrop of the ongoing confrontation between India and China, the Centre has unleashed a new set of measures for the power sector on Tuesday to discourage imports from China. Even though the government directive does not make a direct reference to China, it has introduced a slew of measures to discourage imports and incentivise procurement from domestic manufacturers. However, since the solar industry is heavily dependent on Chinese solar panels, modules, cells, etc, and the official statement makes a reference to a list of countries which would be "prior reference countries," it is quite likely that the new set of measures are a well-contemplated economic response against China's aggression.

The government is set to place more tariff barriers, subsidise financing for procurement of equipment from domestic manufacturers, vet imports from "prior reference countries," and undertake rigorous testing of foreign equipment as part of its plan to promote Make in India and promote Aatmanirbhar Bharat Abhiyan.

Fending off China: RK Singh asks power sector to go for Made in India

At a meeting with industry stakeholders and associations like CII, FICCI, PHD Chamber, Solar and Wind manufacturers, Power Minister RK Singh asked the industry leaders to not import any equipment/materials/goods in respect of which there is sufficient domestic capacity. "In respect of goods and services wherein domestic capacity is not available and that import is inevitable then it should be allowed only for a fixed timeframe of 2-3 years during which indigenous manufacturing of these items would be developed by an enabling policy/tax incentives/start-ups/vendor development/R&D support so that in the next 2-3 years all these items get domestically manufactured.  Till such time, goods so imported shall be tested in Indian laboratories for adhering to Indian standards and also to check the presence of malware," said an official statement released by the Ministry of Power.

"In respect of equipments/items required to be imported, the import of such equipments/items from prior reference countries shall be done only after obtaining prior approval of Ministry of Power/Ministry of MNRE," the statement said. 

Lower interest for developers who use Made-in-India equipment

The minister said that financing from Power Finance Corporation (PFC), Rural Electrification Corporation (REC) and  Indian Renewable Energy Development Agency (IREDA) will be structured in such a manner that lower rates of interest will be charged on the developers who will use domestically manufactured equipments. The Union Minister further informed the attendees of the ministry's proposal to impose Basic Custom Duty (BCD) beginning August, 2020 on solar modules, solar cells and solar inverters.  He said that a clear trajectory of BCD would be declared so that there is no uncertainty about government policy. Further, the approved list of models and manufacturers in respect of Renewable Energy will be made effective from October 1, 2020 as declared earlier. This will ensure that all solar power projects which are bid out as per the standard bidding guidelines will be required to procure solar cells and solar modules and other equipment from manufacturers figuring in the approved list.

Mentioning the recent constitution of an FDI Cell and a Project Development Cell in the Ministries of Power & NRE, Singh said that the FDI Cell will vet proposals for investment from countries that shares borders with India. And the Project Development Cell will hand-hold investible projects so that the process of investment is accelerated. He further informed the meeting that the practice of issuing concessional custom certificates for certain import items in the RE sector will be discontinued from a date that will be specified separately.

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