3.5 Gw of solar tenders in limbo over tax niggles
Close to 3.5 Gw of tenders have been cancelled or delayed for more than a year owing to a lack of clarity on tax and regulations in the solar sector. Of these, projects of 980 Mw were in the domestic content category, which has become controversial. Under the National Solar Mission, the Centre has earmarked a capacity to be awarded for projects built on domestic content, reports SHREYA JAI
Close to 3.5 gigawatt (Gw) of tenders have been cancelled or delayed for more than a year owing to a lack of clarity on tax and regulations in the solar sector.
Of these, projects of 980 megawatt (Mw) were in the domestic content category, which has become controversial. Under the National Solar Mission, the Centre has earmarked a capacity to be awarded for projects built on domestic content. For the domestic content requirement ( DCR) clause, the US has dragged India to the World Trade Organization for preferential treatment to indigenous industry.
This comes at a time when domestic solar manufacturers have complained that the “dumping of panels in India by China has hurt them and reduced their capacity utilisation by more than 80 per cent”.
Some cancelled tenders were for large projects announced in 2015-16 and were facing delays and uncertainties on tariffs.
Last year, solar tariffs saw a record fall of 60 per cent to ~2.44 a unit. NTPC’s 750-Mw tender in Andhra Pradesh and Karnataka and a 250-Mw project in the DCR category in Karnataka stand cancelled now after a delay of more than a year.
Three tenders for the Kadappa Solar Park, totalling 950 Mw and to be awarded by central agency Solar Energy Corporation of India (SECI), are now cancelled. These included 150 Mw in the DCR category.
The others cancelled in the DCR category are a 200-Mw project of Coal India in Madhya Pradesh, a 130-Mw project of Neyveli Lignite Corporation in Rajasthan, and a 250-Mw project of SECI in Karnataka. Of these, the letters of intent have not been issued for over 600 days now. Sector executives said tariffs were being recalibrated because various factors had come into play over the past one year. The major one of them is the goods and services tax of 5 per cent on solar equipment panel from zero earlier. The other is the Customs duty of 7 per cent, which some ports in India are levying, on solar panel imports. The tax authorities have not clarified this.
“Developers are in a difficult financial position and they have become vulnerable to risks. All these factors are making the industry risk-averse and limiting their participation in the tender auction, which is leading to the cancellations or postponements of tenders,” said Gyanesh Chaudhury, managing director and chief executive officer (CEO), Vikram Solar.
A major factor that could affect prices is the decision to impose anti-dumping and safeguards duties on solar imports from China, Malaysia, and Taiwan. The Directorate General of Safeguards, in its preliminary report investigating the dumping of solar cells, has suggested a duty of 70 per cent on imports from China.