India is looking at plans to end duty concessions for turbine component imports in a bid to further ease reliance on China in its already highly-localised wind supply chain, according to reports.
The Indian government could start a phased withdrawal of the concessions from 2021 and has started talks with wind OEMs over the implications of the move, reported the Economic Times citing unnamed sources familiar with the issue.
India’s wind production sector, which has capacity to support up to 10GW of output, is already far more localised than its solar industry, which like other global markets relies heavily on imported Chinese cells and modules.
But the Economic Times quoted one source as saying India’s Ministry of New and Renewable Energy (MNRE) “has examined which components are entering India and from where.
“Several rounds of discussions have been going on. It realised that most of the components are coming from China because it’s cost-competitive.”
The reported move comes against the background of a high-profile push by Prime Minister Narendra Modi for greater industrial self-sufficiency for India – and of increased geopolitical tensions with China.
It is not clear if the increased duties would only apply to China, said the report.
If the policy change materialises, it could be another twist in the complex series of factors affecting renewable power prices in India.
Renewable energy research specialist Sidharth Jain of MEC + wrote in Recharge earlier in July how plans to increase solar import duties could narrow the gap in tariffs between PV and wind.
MNRE in April began a campaign to tempt wind and solar manufacturers to shift from China to India in the light of the coronavirus pandemic.
Atin Jain, an associate at BloombergNEF, said: “Very few details are known about the proposed changes in the custom duties. Therefore it is difficult to predict the impact of rise in import duties on the cost of wind power projects.
“The overall impact will not be disruptive as about 80% of all the components in the wind supply chain are sourced within India. Some products such as those used in making blades are classified under normal category instead of wind energy equipment. Thus, their costs should not change with of the proposed withdrawal of incentives.”
Jain added: “While manufacturers may bear some of these added costs for their backlog order book, in the longer term, the impact of any added costs would be borne by the power producers and the distribution companies.”