India is at risk of undermining its own ambitious solar power targets, executives have warned, after it emerged that the government intends to tax parts for solar panels at more than double the rate of coal under a new national goods and services tax.
Photovoltaic cells will be taxed at 18 per cent under plans for the new GST, which comes into force on July 1, whereas coal will face a 5 per cent levy.
The plans, agreed over the weekend, have triggered accusations of hypocrisy from the solar industry, which warns the move will drive up prices.
“Quite simply, this will drive up costs by 18 per cent,” said Inderpreet Wadhwa, chief executive of solar developer Azure Power. “It will create scepticism in the market, and investors will wonder whether the country plans to make it easier or harder for solar in the future. It will definitely slow down the sector’s growth.”
India has set itself some of the world’s most ambitious targets for installing new solar power capacity, with Narendra Modi, the country’s prime minister, aiming for 100 gigawatts of solar power by 2022. At the end of last year the country had just 7.5 gigawatts.