Centre plans to levy customs duty on solar panel makers in SEZs

Such a move will allow units based in SEZs to be competitive

Central government, Customs duty, Solar panels, Special economic zones, SEZs, Equalisation levy, China, Malaysia, Earn foreign exchange

The Central government is planning to levy a customs duty on solar panels in a way that it does not severely hit domestic companies who operate from special economic zones (SEZs).

The government is planning to charge a small ‘equalisation levy’ on imports of solar panels from factories based in such SEZs and run by Indian companies to sell to domestic customers. This will be in lieu of the basic customs duty that is set to be levied on imports of solar components from other nations, mainly China and Malaysia.

Such a move will allow units based in SEZs to be competitive, compared to imports while selling to local customers, and at the same time, make a level-playing field for companies outside these zones who do not receive similar tax and other benefits.

India had set up these SEZs to boost exports and earn valuable foreign exchange. The plan to impose the tax on solar panel imports has, however, led companies based in these zones to approach the government to exclude them from it when they sell to domestic buyers.

India is set to impose a basic customs duty, which could be up to 20%, on imports of solar panels and modules as soon as a safeguard duty, currently in place, expires on 29 July 2020.

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