Current crisis in Solar Industry highlights the challenges of doing Business in India

road blocks to leadership

Ralph Waldo Emerson had said “Society is a masked ball, where everyone hides their real character and reveals it by hiding.” If Emerson had been from India – and had been an observer to India’s staggering rise to prominence in International Solar industry over the past 3 years – he might well have said the above reflecting on the evident dichotomy that exists in the Government’s portrayal of the growth of the Renewable Energy sector and the ground level difficulties faced by businesses in achieving the government’s proclaimed objectives.

For over one month now, the lofty solar ambitions of the NDA Government have been held to ransom by customs officials at India’s two busiest ports, wherein 90% of the Solar industry’s imports are concentrated, and at a time when the industry is in dire need of government support in the wake of an unprecedented rise in Solar panel prices.

Ever since the government first accorded focus to the industry in India, Solar panels – which constituted anywhere between 65-75% of the cost of a Solar power project – have been imported into the country ‘Duty-Free’ and the said classification of the Panels as a commodity which attracts 0% Duty on import has been reiterated on various occasions by Ministers/ Secretaries and other high ranking dignitaries who hold positions of repute in the NDA Government.

“It is a matter of wrong classification,” said Anand Kumar, secretary in the Ministry of New and Renewable Energy. “They are sorting out the matter. I’ve talked to the board member concerned.”

However, in a classic case of a bureaucracy which seems to suffer systemically from the conflicts of ‘internal politics’ clarifications issued even by the Power Minister have been conveniently disregarded by officials at India’s ports, wherein importers are being made to suffer inexorable losses and time delays while the Industry waits for an ‘official’ clarification to be issued by the Ministry of New and Renewable Energy to the concerned authorities who continue to with hold clearance of imported solar panels without any answer on when they may expect to resolve the internal conflict which appears to arise from a lack of understanding the regulations governing the import of solar panels and the impact of the delay to India’s burgeoning power sector.

When the matter of an alternate classification of Solar panels first arose in August 2016, it may veritably have been viewed as an astute officer performing his duties to serve the best interest of the State, by ensuring that the customs authorities – as gatekeepers of India’s economy – was not according any undue benefit to Importers on the import of fully built Solar panels into the country. The matter of the difference in opinion over the perceived classification of Solar panels was put up to the MNRE and the Ministry of Finance, and a clarification was issued on 22-September-16 wherein the Ministry of Finance clarified to the Customs & Excise Departments across the country that Solar Panels may be classified under the HS Code 8541 and not under the wrongly interpreted Chapter heading of 8501 which refers to ‘Electric Generators’.

Interestingly, this matter of apparent misinterpretation of the two chapter headings 8501 and 8541 appears to have been anticipated at the time of framing the Chapter descriptions as a cursory view of the Chapter shows the following clarification being present in the second point itself, wherein it states:

Headings 8501 to 8504 do not apply to goods described in headings 8511, 8512, 8540, 8541 or 8542.

 

Point 8, of the Chapter 85’s explanatory notes further goes on to explain that For the classification of the articles defined in this Note, headings 8541 and 8542 shall take precedence over any other heading in this Schedule”

Nevertheless, subsequent to the order of 22-Sep-16, the Commissioner of Nhava Sheva customs through his order dated 29-Sep-16  http://www.jawaharcustoms.gov.in/pdf/PN-2016/PN_NO_135.pdf put the said matter to rest. subsequent to which Solar panels went back to being cleared at 0% duty and the industry’s growth story continued to be told to whoever would listen.

However, since government agencies appear to view businesses in India with inherent skepticism, the matter of the evidently clarified misinterpretation was once again raised by the same ports, for the same commodity, bearing the same classification as had been disposed of the previous year, only this time on a different and seemingly incomprehensible pretext that the Solar Panels should be classified as Electric Generators since ‘they are capable of producing power’ 

Anyone with even an elementary understanding of why Solar power is being perceived as a technological disruption may be forgiven to believe that it is almost inherently implied that a Solar panel is ‘supposed to produce power’. But, as Pascal opined – Governance knows reason, that reason cannot know…

And so, the industry waits with bated breath. For a clarification that everyone believes already exists. While officials exercise unchallenged power over helpless businesses. Who quietly bear the brunt of excessive and cascading charges levied by international shipping lines. Under the threat of penalties being enforced by State government and Public Sector undertakings on delayed implementation of projects which are portrayed as India’s efforts to build a self sufficient and sustainable power infrastructure…

Government performs many different roles in an economy. Conventionally, it was presumed that role of government is to sustain the law and order, protect a country from external attacks, provide social security, take care of public utilities and maintain peace within a nation. But given the command that a Government has over all resources in an economy, over time these roles have taken a concrete shape to bring about development and growth of an economy as well business.

Indian Businesses are often left wondering whether the above holds true in case of India’s governance. And as everyone waits for answers, and a resolution in the face of unwarranted delays, Martin Luther King, Jr. reminds us that

In the End, we will remember not the words of our enemies, but the silence of our friends. 

A group of tech enthusiasts who are tracking latest developments in CleanTech with special focus on Energy Storage and Electric Mobility

About Energy Log Staff

A group of tech enthusiasts who are tracking latest developments in CleanTech with special focus on Energy Storage and Electric Mobility

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One Comment on “Current crisis in Solar Industry highlights the challenges of doing Business in India”

  1. Very impressed with the texture and tone of said note pertaining Crisis in Solar Industry….Roads Blocked 🙂

    Congratulations on being honest !!

    Can someone from this team call upon me on Monday, 30th morning @ 98717 26762

    Rajneesh Khattar, Group Director, UBM India
    Organiser of Renewable Energy India Expo

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