Chinese and Malaysian solar panels face 25% safeguard duty in India

The Indian solar manufacturing had asked for 95 per cent safeguard duty on imports

“It should be noted that if the SGD is imposed without exempting the SEZ, it will affect the domestic manufacturing industry adversely as 3,825 megawatt (Mw) of the 8,898 Mw of installed capacity of solar modules is based in the SEZ and 2,000 Mw of the 3,164 Mw of installed capacity for solar cells is based in the SEZ. If the government wants to impose SGD, it should exempt the SEZ,” said Gyanesh Chaudhary, managing director and chief executive officer, Vikram Solar.

The SGD would lead to an escalation of 60-70 paise in the solar power rates which are currently hovering around Rs 2.5 per unit and above.  “The final solar power tariff would now shoot above Rs 3 per unit,” said a solar power producer, adding that in case of roof-top solar projects, the tariff would be more than Rs 4 per unit. This would render roof-top solar projects costly and unviable, he said.

The Indian Solar Manufacturers Association (ISMA) had filed an application in June last year with the government claiming imported solar cells have flooded the market, causing injury to the domestic industry. The association urged for a SGD for a level playing field.

The Directorate General of Safeguards (DGS) in its preliminary report in January this year investigating had suggested a duty of 70 per cent on the imports coming from China. The DGS was merged with other trade remedial bodies under the umbrella organisation DGTR in May.

The DGTR held a hearing of all stakeholders in the matter, including ISMA, Indian power project developers and their association, exporting countries – China, Taiwan, Europe, the US, and their respective trade associations and government officials.

In its final recommendation, the DGTR observed that the position of domestic industry “further deteriorated on account of continued low price of import of product under consideration (solar cells and modules) which continued price injury to the domestic industry, thereby establishing the threat of injury as well.”

The DGTR took into consideration the market share and profitability, which sharply declined over the injury period 2014-2015 to 2017-2018 (annualised) whereas market share of imports have increased during the same period.

The Indian solar manufacturing had asked for 95 per cent SGD on imports. On the other side, Indian project developers and more than a dozen importers from China, Taiwan, Canada, etc said any SGD would be detrimental to India’s solar target. In its application, ISMA has estimated that with a duty of 20 cents/watt, the increase in power tariffs would be Rs 0.7 per unit. The project developers however, have calculated the increase to be around Rs 1-1.5 per unit.

The current installed capacity of Indian solar cell manufacturing is around 1,386 Mw and the module is close to 2,500 Mw, according to government estimates.  Less than 20 per cent of the manufacturing capacity is operational due to low demand. Of the total solar power generating capacity, more than 80 per cent is built on imported cells from China, 10 per cent from the US, and the balance domestic. India’s current solar power installed capacity is 21,000 Mw.