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India vs. China – Import duty on solar panel hiked to 40% – Government aims to counter China

India vs. China – Import duty on solar panel hiked to 40% – Government aims to counter China


  • GS 3 II Science & Technology II Energy II Renewable Energy

Why in the news?

India imposed Import duty on solar panel, hiked up to 40%

Present context:

The government has decided to impose 40% basic customs duty (BCD) on solar modules and 25% on solar cells from 1 April 2022, in a move that would make imports costlier and encourage local manufacturing.

All about solar panel

What is solar panel?

  • Solar energy begins with the sun. Solar panels (also known as “PV panels”) are used to convert light from the sun, which is composed of particles of energy called “photons”, into electricity that can be used to power electrical loads.
  • Solar panels can be used for a wide variety of applications including remote power systems for cabins, telecommunications equipment, remote sensing, and of course for the production of electricity by residential and commercial solar electric systems.

Problems with Solar Panels:

  • Delamination and internal corrosion: If moisture finds its way into the panel, it can cause internal corrosion. To avoid this issue, ensure that your panels are keeping out air and water and that all the components of the solar panel are laminated under vacuum pressure.
  • Electrical issues: Faulty wiring prevents your solar panels from performing well. Loose connections, corrosion, and oxidation may interfere with electricity production. Unless you know what you are doing, or perhaps you are a qualified electrician, don’t try to tamper with the wiring system on your own.
  • Micro-cracks: Micro-cracks are a common issue with solar panels and can compromise the effectiveness of your system. These are tiny cracks on the panel and are hard to notice with your naked eyes. But with time and significant weather changes, the cracks can grow.
  • Hot spots: Hot spots are among the most common issues with solar or PV systems. They can degrade the function of your solar panels and even render them irreparable. Hot spots occur when panels get too warm and overload.
  • PID effect: PID stands for Potential Induced Degradation. It can occur due to the voltage difference between the earthing and the solar panel. When this happens, the primary power circuit ends up producing partial voltage discharge.
  • Birds: Those lovely little birdies tweeting overhead can wreak havoc on solar systems. They can nest beneath the panels and keep the system from doing its job properly. Thus, if you notice birds gathering on your roof, consider bird roofing solutions like spikes, mesh wire, and more.
  • Snail trails: Another common solar panel problem is known as “snail trail” contamination. The name here comes from the brown lines that show up on your panels, giving the appearance that snails have traversed the surface.
  • Roof issues: The solar system should not affect the integrity of your roof. Conversely, it can serve as a nice layer of protection for the roof materials below. However, in some cases, the installation can hurt your roof in some way. Make sure that you inspect your roof from time to time, and call your PV system installers if it seems to be compromised in any way.
  • Inverter problems: Solar panels use an inverter to convert direct current from the sun to alternative current that you now use in your home. An inverter is like a box that is usually installed in the upper floor.

India and USA at WTO:

  • A World Trade Organization (WTO) dispute resolution tribunal has ruled in India’s favor in a major trade dispute with the United States.
  • India argued that the domestic content requirements and subsidies imposed by the US governments in the energy sector violated many provisions of the Trade-Related Investment Measures (TRIMs) Agreement and the Subsidies and Countervailing Measures Agreement.India brought this dispute to the WTO in 2016.
  • In the same year, the United States won a case at the World Trade Organization (WTO) against India’s solar-power policies, arguing that the policies had resulted in a 90% reduction in US solar exports to India. Subsidies and mandatory local content provisions imposed by eight American states (Washington, California, Montana, Massachusetts, Connecticut, Michigan, Delaware, and Minnesota) were found to be in violation of international trade laws by the commission.
  • Subsidies and mandatory local content provisions imposed by eight American states (Washington, California, Montana, Massachusetts, Connecticut, Michigan, Delaware, and Minnesota) were found to be in violation of international trade laws by the commission.
  • Was India really wrong?
    • The decision has been interpreted as yet another example of outdated trade laws superseding essential environment imperatives. It is regarded as undermining India’s attempts to encourage the use of renewable energy sources. This critique, however, is not completely justified.
    • There seems to be no valid justification for how mandated local content standards relate to encouraging the use of renewable energy;
    • additionally, by forcing solar power companies to purchase locally, the government imposes an unnecessary expense for the output of clean energy, which is normally passed on to the ultimate user. As a result, the decision could favor the public interest.

How India is promoting solar energy in India?

  • Solar mission of India:The Jawaharlal Nehru National Solar Mission (also known as the National Solar Mission) is a major initiative of the Government of India and State Governments to promote ecologically sustainable growth while addressing India’s energy security challenges.
  • PM Narendra Modi’s special initiative In Solar Mission:PM aims to make India self-sufficient in terms of its energy needs by adopting solar energy i.e. clean and green energy. In his former position as chief minister of the western state Gujarat, Modi oversaw the construction of Asia’s biggest solar park, agiant utility with battalions of solar panels.
  • PM Narendra Modi calls for indian solar army:Prime Minister Narendra Modi calls for Indian Solar Army. In line with the ambitious target of solar installation of 1, 00,000MW (100 GW), the Government of India (GoI) is planning to train around 50,000 people in areas related to solar power.
  • The Government of India offers following incentives for solar energy sector:
    • Exemption from excise duties and concession on import duties on components and equipment required to set up a solar plant.
    • A 10-year tax holiday for solar power projects.
    • Wheeling, banking and third party sales, buyback facility by states.
    • Guaranteed market through solar power purchase obligation for states.
    • Schemes for small solar projects connected to a grid below 33KV.
    • Reduced wheeling charges as compared to those for conventional energy.
    • Special incentives for exports from India in renewable energy technology under renewable sector-specific SEZ.
    • A payment security mechanism to cover the risk of default by state utilities.
    • A subsidy of 30% of the project cost for off-grid PV and solar thermal projects.
    • Loans at concessional rates for off-grid applications.
  • Setting up of the solar institutes/agencies by government:
    • National institute of solar energy (NISE)
    • Solar energy corporation of India (SECI)

Benefits of entering solar market in India:

  • Demand Side:
    • Average demand-supply gap of 12%;
    • National Solar Mission (NSM) aims at increasing investment in the solar energy sector in India thereby increasing the market and driving down costs;
    • Increasing consumption from 660kWh to 1900kWh by 2032.
  • Supply side:
    • Fast depletion of non-renewable sources of energy;
    • Favorable environment by providing various subsidy schemes;
    • Huge demand of electricity from rural area lacking grid connectivity;
    • Power Generation Companies to resort to renewable sources.
  • Job creation is one of the benefit of solar market
  • Apart from this the revised targets of National Solar Mission (NSM) by the National Action Plan on Climate change adds to the overall market capitalization of solar energy sector in India.
    • National Solar Mission Target revised to 1,00,000 MW;
    • Market potential of INR. 2000 Billion;
    • Prime Minister Narendra Modi calls for India Solar Army: GoI to train 50000 people; this creates multiple opportunities in the Solar Sector in India.
  • Success story of solar power:India’s Cochin international to become world’s first completely solar powered airport
    • Solar alliance with 120 countries:Keeping in mind India’s pledge to the Paris summit offered to draw 40% of its electricity from renewable Source by 2030, Prime Minister Narendra Modi has launched an International Solar Alliance (ISA) of over 120 countries


India is standing on threshold of green energy revolution that can light up a new era of energy, economic and environmental security. To achieve this goal India needs to fundamentally transform the manner in which it produces, distributes and consumes the energy. Given its abundant solar insolation, India has already outlined clear plans for future energy production from the sun. Barriers to implementing this renewable energy plan seem to be primarily social and political rather than technological or economic. The technology is well established and available.Solar energy has the potential to propel India forward as a “Solar Super Power.” However, for India to meet its future energy needs, it can no longer afford to delay deployment of solar energy plans.

Mains oriented question:

The solar energy offers India the theoretical potential to provide all its long-term power needs, what role can solar power play for India in future. Illustrate with suitable example? (200 words)