India imposes 25% tax on Solar Panels imported from China

In a move to combat price disparity, India levied 25% tax on Solar Panels imported from China. The tax on Chinese Solar Panels will last an year, and then will be reduced to 20%.

Why only China?

China has a large and cheap production industry and therefore almost everything gets made really cheap in China. Solar Panels are no exception. India has been a large importer of Chinese Solar Panels. The import of Chinese Solar Panels increased from 1/5th of total Chinese production to 2/5 th in 2017. This meant cheap Solar Panels for average consumers in India.

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Reasons behind increased tax on Chinese Solar Panels

While it is good for the environment, the Chinese Solar Panels are hurting Local producers. India also has its own Solar Panel industry. Due to slightly costlier labor in India, the panels are not as cheap as China and hence not in as much demand. To solve this problem, the Government has tried to regulate the prices. By levying a 25% tax on Solar Panels made in China, the prices will somewhat become even across the board and will help local producers.

The Aftermath

The move has a polarized reception, as is the case with every move the Government makes. On one hand, the Solar Panel producers in India are happy. They get a major chunk of their business back and will survive a bit longer. On the other hand, the increased tax on Chinese Solar Panels has hit developers with Solar power projects pretty hard. They started the projects with an average cheap figure in mind, but unbeknownst to them, the prices have increased quite a bit. It will put projects worth Rs 1000 Billion under jeopardy.

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There is also the issue of environment. India plans to siphon off 40% of its energy from renewable sources by 2030. The increase in prices may hinder this growth as more people seeing less profit will refuse to go the green way.

Only thing to do right now is assess the total effect. Is it worth stopping so many large projects just to give local producers a level playing field? Is it okay to stray away from the green-goal just to get a chunk of business back? What are your views? Comment down below!

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