Context

The Harmonized Commodity Description and Coding System, generally referred to as the "Harmonized System" or simply "HS", is a multipurpose international product nomenclature developed by the World Customs Organization (WCO) to classify traded commodities.

It comprises 5,000 commodity groups, each identified by a six-digit code. Countries are allowed to add codes as a suffix to the first six digits to further classify various commodities/products with more precision. India uses an 8-digit classification.

HS ensures smooth international trade operations by supporting processes such as but not restricted to:

• Price monitoring
• Applicable tariffs
• Rules of origin

But among all this categorisation and demarcation, some gaps remain for the renewable energy sector. For instance, until recently, India had the same HS code for solar cells whether or not they were assembled as modules/panels – 85414011. In the Union Budget 2020, the Ministry of Finance segregated the HS codes¹ as following:

• 85414011 - Solar cells (not assembled)
• 85414012 - Solar cells (assembled in modules or made up into panels)

However, despite segregation in the Union Budget 2020, the Ministry of Commerce's website presents data only under one HS code.

Relevance & Impact

Figure 1: Export and import of solar cells and modules from all countries

Source: Ministry of Commerce and Industry²

The graph above shows that India imported solar cells and modules valued at close to $62.6 million between April 2020 and February 2021. Since solar cells and solar modules both have the same HS code, it is difficult to differentiate between imports of solar cells and solar modules. Additionally, the ministry shares information in quantity and value (INR and USD) for every commodity. Hence, one cannot quantify the import in kW or MW.

Availability of segregated data in appropriate units (kW and value) can have a significant impact on the sector. The government can use it to frame better policies and the industry can use it to make informed business decisions.

Who should care

• Ministry of New and Renewable Energy
• Ministry of Commerce and Industry
• Ministry of Finance
• Solar cell and module manufacturers