Solar PV panels: Duties on plant, machinery and raw material to go away

ISLAMABAD: The government is likely to remove duties on the import of plant, machinery, equipment and raw materials used in manufacturing of solar PV panels in the budget 2024-25, well informed sources told Business Recorder.

According to Managing Director, Private Power Infrastructure Board (PPB) the Fifth Schedule of the Customs Act, 1969 provides an exemption from customs duty on the import of solar PV systems, which includes PV modules, charge controllers, inverters, batteries, etc. Whereas, on the other hand, industrial entities engaged in the import of machinery, equipment and spares meant for local solar PV panel manufacturing /assembly face varying customs duty rates, in addition to supplementary sales tax and advance income tax.

He maintained that this disparity significantly escalates the operational costs associated with local manufacturing of such equipment, consequently creating an uneven competitive landscape between imported and locally manufactured equipment.

In consideration of the foregoing and with the aim of establishing a fair and competitive environment between imported and locally manufactured equipment, PPIB strongly recommended that all plant, machinery, equipment, end raw materials utilised in the manufacturing/ assembly process of solar PV panels and associated equipment be exempted from duties and taxes, he added.

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PPIB further contended that this strategic measure is anticipated to incentivise and strengthen domestic production, thereby mitigating foreign exchange outflows and operational costs. Furthermore, as the local industry progress’s beyond the nascent stages of domestic production of solar PV panels and allied equipment, the gradual withdrawal of duty and tax exemptions on imported finished products of solar PV systems could be beneficial.

Such a phased approach aligns with the overarching objectives delineated in the alternative and renewable energy policy, 2019, emphasising a balanced transition while supporting the growth and sustainability of local industries. PPIB has requested FBR to remove the anomaly by providing an exemption from duties on the import of plant, machinery, equipment and raw materials used in the manufacturing of solar PV panels and related equipment in the upcoming budget proposals.

Copyright Business Recorder, 2024