Delay in Imposition of BCD on Solar Equipment Impacting Investments: CII

CII has urged the finance ministry to impose the BCD on solar equipment, stressing that the delay in implementation is impacting investments.

The Confederation of Indian Industry (CII) in a written memorandum to the Ministry of Finance has urged the ministry to impose the planned basic custom duty (BCD) on solar equipment as announced in the last general budget, stressing that the delay in implementation is impacting investments.

The memorandum stated that the implementation of BCD on solar equipment was announced in the last Union Budget, but the government is yet to lay down the implementation road map. Further hinting that the delay in the BCD levy is impacting the investment decisions of the industry. 

The CII also urged the ministry to bring power under the ambit of GST (goods and services tax), saying that this has been requested through its pre-budget recommendations for several years. It is proposed that the electrical energy may be brought to the GST net with a lower rate of GST or keeping it exempt from GST, a refund of input credit should be given to the generating/transmission/distribution utility, it added. This is pending a decision from the Government of India, the body claimed.

Furthermore, the CII representatives also highlighted that decision on Tariff Policy, 2016 and that the Draft Electricity Amendments Bill (EAB) 2020 is pending, during a scheduled pre-budget meeting with finance ministry officials. 

They stressed that the Tariff Policy is an important policy for bringing in more competition, especially in the distribution sector. And the EAB 2020 was also hailed by the industry as an important step for bringing in more efficiency to generation, distribution, transmission and alternate procurement like short-term market, open access, etc. Both are important policy guidelines and are pending implementation from the government, it stated.

About the enforcement of must-run status of renewable energy (RE) plants, it said that the issue of artificial curtailment has been a cause of concern for renewable energy generators, especially in renewable energy rich states.

“Violating the ‘must-run’ status of RE plants, SLDCs (state load dispatch centres) have been curtailing RE generation despite adequate grid availability. Discoms or the SLDCs/RLDCs (regional load dispatch centres) permit preferential outflow of power from generating stations by holding up off-take of power from other stations. Therefore, enforcement of must-run in true letter and spirit is yet to be seen in some states,” it pointed out.

About the enforcement of the letter of credit (LC) and payment security for both renewable and conventional power generation plants, it stated that as of September 2020, the Discom dues stand at Rs 1,26,000 crore. There were already legacy payment issues that have accumulated with the power sector running into a mid-year turmoil as the country faced the pandemic that severely affected demand, it pointed out.

While mandating an LC was one of the very progressive moves from the Government of India, announced at a CEOs Dialogue in 2019. There are implementation issues at states that require guidance and intervention, it stated.

In October, RK Singh, Minister for New and Renewable Energy, had said that India will soon tighten provisions for imports of solar equipment in order to encourage more domestic manufacturing even as power demand post the covid outbreak has rebounded. 

Speaking at a conference titled “India PV Edge 2020,” the minister said that the government was not only planning to impose a basic customs duty but also introduce a list of approved providers and manufacturers to ensure that there is no injury to the domestic manufacturers. We are putting up barriers. One of the reasons is dumping that has happened from some countries at very low prices. We are going to put in place customs duty. We are also going to have an approved list of providers and manufacturers.”