Govt to act against solar power developers flouting local sourcing norms

The govt would file criminal complaint under IPC 420, blacklist the developer for 10 years or even take disciplinary action against errant developers

Rituraj Baruah
Updated20 Oct 2023
By the end of last fiscal, India’s solar module manufacturing capacity stood at 38 GW and the government expects to add 48 GW of manufacturing capacity in next three years. (File photo: Bloomberg)
By the end of last fiscal, India’s solar module manufacturing capacity stood at 38 GW and the government expects to add 48 GW of manufacturing capacity in next three years. (File photo: Bloomberg)

New Delhi: The Centre has warned solar power developers of strict action if they are found flouting norms that require the use of solar modules from domestic sources in projects funded under government schemes.

The ministry of new and renewable energy (MNRE), in an office memorandum, reiterated that it would resort to filing of criminal complaint under IPC 420, blacklist the developer for 10 years or even take disciplinary action against the concerned PSU or government agency. The government came up with these domestic content requirement norms in 2018 wherein it had outlined the penalties for non-compliance.

Domestic content requirements are trade regulations to promote domestic production and employment by mandating a particular percentage of a product’s value to be sourced locally. Under some of the current schemes of MNRE, including CPSU Scheme Phase-II, PM-KUSUM, and grid-connected Rooftop Solar Programme Phase-II, wherein government subsidy is given, it has been mandated to source solar photovoltaic cells and modules from domestic producers.

Noting that the ministry in February 2018 had announced to enforce strict action in cases where the domestic content requirement has been mandated, the notification said: “Apprehensions have again been raise regarding supply of such solar PV modules under MNRE’s schemes/programmes, which may not be fully compliant to the the domestic content requirement (DCR) provisions prescribed under respective schemes/programmes of ministry of new & renewable energy.”

“Accordingly, it is once again reiterated that domestic content requirement provision as mandated under the respective schemes/programmes of miistry of new & renewable energy should be strictly complied to and any violation of such DCR provision will invtie actions,” it said.

This is among a series of steps taken by the government over the past few years to reduce cheaper imports and boost domestic manufacturing of solar modules and other related products like cells and wafers.

The government has come up with the production-linked incentive (PLI) scheme for modules, cells and related products in two tranches. In March this year, the government announced that it allocated a total capacity of 39.6 GW of domestic solar PV module manufacturing capacity to 11 companies, with a total outlay of 14,007 crores under the PLI scheme for high efficiency solar PV modules (Tranche-II).

By the end of last fiscal, India’s solar module manufacturing capacity stood at 38 GW and the government expects to add 48 GW of manufacturing capacity in next three years.

A total integrated capacity of 8.73 GW was allocated under tranche-I of the scheme, in November-December, 2022. Considering the two tranches together, the total domestic solar PV module manufacturing capacity allocated under the PLI Scheme is 48.33 GW, with a cumulative support of more than 18,500 crore by the government, an official statement had said in September.

Centre has also announced the imposition of basic customs duty of 40% on import of modules and 25% on that of cells with effect from April last year to discourage imports and boost demand for local products.

However, amid lack of local supplies, reliance on imported modules and cells continues. In response to the supply shortage, the government exempted ongoing solar projects from the mandatory requirement of procuring photovoltaic modules from the Approved List of Models and Manufacturers (ALMM) in March.

The projects commissioned by 31 March, 2024 would be exempted from the requirement of procuring modules under ALMM. 

ALMM mandate was introduced in 2021 as a non-tariff barrier to boost domestic manufacturing, by approving the list of indigenous models and manufacturers who could participate in the solar development projects bid out by the government.

India’s solar cell and module imports rose 55.1% in the April-June quarter of FY24 to $926.6 million. The demand for modules and cells would grow as India aims to reach a cumulative installed solar power capacity of 292 GW by 2030. The current installed capacity stands at 67 GW while another 96 GW is under implementation or has been bid out.

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