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Indian Government May Kill Solar Revolution Before It Even Started

Natalie Obiko Pearson, Bloomberg New Energy Finance

The Indian government may strangle Prime Minister Narendra Modi’s efforts to reap more electricity from the sun should it impose duties on solar panel imports proposed by the nation’s previous administration.

Only a quarter of the 1.6 gigawatts of solar capacity in the works now will be finished if the levies are enacted, said Headway Solar Pvt., an industry consultant based in Gurgaon, near New Delhi. The tax would double the cost of solar power, according to the Solar Power Developers’ Association.

The estimates are aimed at pushing Modi’s government away from backing a recommendation to impose the duty, which would protect India’s few solar cell producers from cheaper Chinese and U.S. imports. Modi must balance the needs of those manufacturers led by Indosolar Ltd.and Websol Energy Systems Ltd. against the interests of panel makers and developers that benefit from cheaper cells.

“It’s a nasty, poisoned gift from the outgoing administration to the incoming one,” said Tobias Engelmeier, founder of Delhi-based consultancy Bridge to India Energy Pvt., who says everything from solar lanterns in rural villages to large grid-connected generators will become uneconomical. “It’s going to deflate the market terribly.”

Finance Minister Arun Jaitley, appointed by Modi after a landslide election victory on May 16, has until Aug. 22 to implement the duties favored by the Ministry of Commerce & Industry. Officials in charge of clean-energy policy oppose tariffs but say there’s little they can do.

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