Imports of these products stood at $3.6 billion in April-November 2019, of which more than 60% came from China.
India has created new tariff codes for wall fans, panels of TV sets and solar cells in a move to track and check their imports, most of which are from China.
The government has amended the Customs Tariff Act to create new tariff item (called HS code in trade parlance) for ‘wall fans’, ‘open cell of television set’ and each for ‘solar cells not assembled’ and ‘solar cells assembled in modules or made up into panels’.
As per the existing classification, the import of these products was $3.6 billion in April-November 2019, of which more than 60% came from China “There have been safeguards issues on solar cells and with our focus on non-conventional energy, we need to see how much of the imports are coming from China. In case of wall fans, many large players import these from China,” said an official aware of the details.
India had imposed a safeguard duty on imports of solar cells from China and Malaysia in 2018 to protect domestic players from a steep rise in inbound shipments of the product. Solar cells are electrical devices that convert sunlight directly into electricity.
“With India planning to ramp up its solar capacity and have solar installation alongside rail tracks, it is important to classify the imports in the right heading for them to be able to enjoy appropriate duty benefits and also to track them correctly,” Bipin Sapra, partner at advisory firm EY.
Experts said that the solar cell related changes are because of confusion at the ports wherein a lot of products which were not solar cells ended up being assessed for safeguard duty unnecessarily because they fell under the same HS codes.
While around 90% of the solar panels and modules (made using solar cells) are imported, open cell is the most critical component used in TV manufacturing accounting for 65-70% of the total production cost. Indian fan industry grew around 9% last year.
“There is a lot of litigation going on open cell classification. This is perhaps meant to address that,” said an expert on tax issues.
The government said the tariff on wall fans is 20% and the basic customs duty has risen from 7.5% to 20%. For open cell of TV set, the tariff rate is 15% while that on solar cells is 20%. Basic customs duty on both is nil.
“These are non-essential products whose imports have increased and need to be checked. Wherever possible they can be replaced with locally-made goods,” said an expert on trade issues.
In the April-December period, India’s exports fell 1.96% to $239.29 billion and imports declined 8.9% to $357.39 billion, leaving a trade deficit of $118.10.
