Customs Duty Regulations for Solar Power Projects in India have evolved significantly over time.
Initially, the government introduced these changes to promote the installation of solar power projects by reducing import duties and lowering capital costs. A decade later, the focus shifted to reducing import dependency and boosting the domestic manufacturing industry, leading to the curtailment of earlier import concessions related to solar power projects.
Here we have tried to summarize these key changes along with timeline
January 2011 - Concessional Duty related to Solar Power Projects:
- Notification: Notification No. 01/2011-Customs dated January 6, 2011
- Details: A concessional Basic Customs Duty (BCD) of 5% was introduced on the import of machinery and equipment for initial setup of solar power generation project
- Reason: To promote the development of solar power generation projects in India by reducing the initial capital expenditure on necessary machinery and equipment.
February 2021 - Concessional Duty on Solar Projects Discontinued:
- Notification: Notification No. 07/2021-Customs dated February 1, 2021
- Details: Concessional customs duty for items imported for solar power plants and solar was discontinued with effect from February 2, 2021.
This rescinded the earlier Notification from 2011.
- Reason: To support domestic solar equipment manufacturers and boost the indigenous industry by discontinuing import concessions on goods related to solar projects.
April 2022 - Increase in Basic Customs Duty:
- Source: Finance Act 2022
- Details: Basic Customs Duty (BCD) on solar cells and modules increased from April 1, 2022:
- Solar Cells (HSN 8541 42 00): BCD increased from 20% to 25%
- Solar Modules (HSN 8541 43 00): BCD increased from 20% to 40%
- Reason: To incentivize domestic manufacturing and reduce import dependency.
October 2022 - Exclusion from Project Import Scheme:
- Notification: Notification No. 54/2022-Customs dated October 19, 2022
- Details: Solar Power Plants/Projects excluded from the benefits under Project Import Scheme and Chapter 98 of concessional import duty with effective from October 20, 2022.
- Amendment: Table of Eligible projects under Project Import Regulations, 1986 amended as follows:
- For Sr. No. 2: Changed to “All Power Plants and Transmission Projects, other than solar power plants or solar power projects.”
- For Sr. No. 3: Changed to “Power Plants and Transmission Projects, other than solar power plants or solar power projects and other than those mentioned at Sr. No. 2 above.”
February 2023 - Further Exclusions from Project Import Benefits:
- Notification: Notification No. 07/2023-Customs dated February 1, 2023
- Details: Solar power plants/projects excluded from eligible projects specified under Project Import Regulations, 1986 for Project Import Benefits.
- Amendment: For Sl. No. 4 in Table of Eligible projects under Project Import Regulations 1986: Description Changed from “Any other Plant and Project” to “Any other Plant and Project, other than solar power plant or solar power project.”
