In a bid to check proliferation of Chinese equipment in the critical power sector, the central government plans a major policy shift that will incentivise domestic manufacturing while putting restrictions on all imports where local capacities exist.
Power Minister RK Singh said that as part of the new policy initiative a mega manufacturing programme is being launched to incentivise a phased manufacturing plan through investments while scaling up existing manufacturing capacities so that India not only reduces it import dependence but also becomes a major exporter of energy equipment.
"There is no need to go for imports of things available in the domestic market. We want to build Atmanirbhar Bharat, so power project developers using local equipment will get encouragement by way of lower interest on loans from state funding agencies such as PFC, REC and IREDA compared with those who rely on imports. Also, import of items manufactured in the country will attract a higher duty," Singh said during a media interaction after a meeting with state energy ministers.
He said that in conventional power segment, India lacked only in equipment manufacturing at present. "We will encourage phased manufacturing here so that even these capacities come up soon and thus reduce import dependence," Singh said without mentioning whether tariff and non-tariff action were directed at China.
In 2018-19, the total imports in conventional power sector were to the tune of Rs 75,000 crore, of which imports from China stood at over Rs 21,000 crore.
In renewable energy segment, imports stood at $2.9 billion in FY19, with close to 70 per cent of it from China.
Singh said even in renewable energy segment, sufficient domestic capacities for both solar modules and Veela existed in the country that should discourage imports. The minister said that in solar cells, the existing domestic capacity is being increased by more than three times from present 2,500 MW.
About 4,000 MW of fresh cell manufacturing capacity is coming up while 3,000 MW additional capacity will be added under manufacturing-linked bids for solar projects.
The Power Minister said that in case of solar modules as well, 7,000 MW in capacity is being added. This, he said, should be sufficient to meet the country's needs as well as exports.
To discourage imports of solar equipment, the Power Ministry has already proposed a 20-25 per cent basic customs duty on solar module imports for the current year, which will go up to 40 per cent in the next year.
Also, the duty on solar cells has been proposed at a lower 15 per cent for the first year and a higher 30-40 per cent in the next year. Already, solar imports attract 15 per cent safeguard duty.
Singh said imports would also be checked through an approved list of models and manufacturers (ALMM). It will only allow imports from entities approved by the Power Ministry.
Also, the ministry has suggested stringent quality standards for imports of all kinds of power equipment be fixed and substandard products outrightly rejected and suppliers blacklisted. Goods so imported will be tested in Indian laboratories as per Indian standards and to see presence of malware with a potential to jeopardise security of critical infrastructure installations in the country.
The plan is also to put in palce another layer of checks at the ministry level that will first clear all import proposals. In such case, the equipment/items required to be imported from prior reference countries will be done only after obtaining prior approval of the Ministry of Power and Ministry of New and Renewable Energy.