In the quest of protecting the market for Indian solar panel manufacturers, directorate of safeguards proposed implementing 70% provisional safeguard duty on imported solar panels.
The biggest builders of solar panels from India have united to propose the Indian regulators to impose an emergency tax on solar cells that are imported from China and Malaysia. If implemented, this will hit the Chinese market hard as India has been a major market for it.
Adani Group led the call to impose such a duty in India along with other panel makers.
New Delhi’s directorate general of safeguards accepted the demand and said that it would propose an urgent 70 per cent tariff on imported panels for 200 days until it reaches a permanent conclusion.
In the initial investigation, DGS argued that the Chinese solar panels are flooding the market and, if not taken seriously, could damage the domestic industry in near future.
But the proposal has gained antipathy from those solar developers who had already lowered their tariff rates while bidding for tenders. Last year, India has seen the lowest solar energy tariffs which have been possible only because of falling prices of Chinese solar panles. The argument is that DGS would put the bigger solar industry at risk in order to save only a few Indian manufacturers, as the cost of installation will spike.
Not only developers, even smaller manufacturers seem unhappy from the inclusion of raw materials under the same tariff. The additional tariff will make it expensive for manufacturers to build solar panels. There are very few companies who make their own individual cells; one of them will be Adani soon.
The same instances have happened before. In 2013, EU imposed anti-dumping tariffs on Chinese solar panels. Beijing replied to it by raising duties on European wine. In 2014, US imposed up to 165 per cent duty on imports from China and Taiwan. China shifted its focus to India and their exports increased by 1,100 per cent from 2012 to 2016.
US also took action against India by launching a successful challenge against New Delhi’s requirement for local materials that were to be used under some government solar power scheme, at WTO.
The DGS dispute is the latest in the above series of international disputes in trade of solar panels manufacturing.
The step by DGS will hurdle India’s ambitious plan to install 100GW of solar capacity by 2022. It will increase the cost of installation by 40 per cent.
Domestic manufacturers welcomed the plan and argued that it would help in achieving Modi’s hopes to increase the domestic production under “Make in India” scheme.
All the companies involved have next few weeks to present their points and appeal DGS before the decision gets finalized.
However, DGS’s decision would not completely finish the problems between Chinese manufacturers and Indian developers. While DGS’s decision is being made, New Delhi’s commerce ministry is considering to levy an anti-dumping tariff that may be even higher than safeguard duty.