The recent approval by the Finance Ministry to impose safeguard duty on solar imports is likely to increase the cost of power for discoms and end consumers, resulting from a spike in solar tariffs, said TERI.
TERI believes that such an act could jeopardize India’s solar capacity addition targets. Ajay Mathur, director general, TERI in an interaction with Economic Times said that imposing safeguard duties will not help the domestic solar industry.
Mathur believes that this act would substantially increase cost of solar power thus making it less attractive to the buying utilities, and ultimately hindering the pace of growth of development of solar power.
He further commented that this move is also likely to result in higher average power purchase cost (APPC) for the buying utilities and higher costs to the consumers.
Lack of economies of scale, technology performance and higher cost of the capital borrowed from banks and NBFCs have been a major obstacle for domestic solar manufacturers who could not compete with foreign manufacturers so far.
Mathur suggested that the government should instead competitively procure, for its own use, solar electricity generated from only domestically manufactured panels to help the local solar equipment manufacturers in India.
TERI added that the imposition of safeguard duty at this stage could be counterproductive as a large capacity of solar power is under installation where projects have been selected through a competitive reverse bidding process based on pre-safeguard duty price.
Lastly the statement added that as a solution to this problem, the government needs to balance the solar deployment targets and needs of solar manufacturing industry. For it is only then can the country achieve the solar targets along with energy security.
