70 percent safeguard duty will be charged on all the solar cells and modules imported from China and Malaysia. The Directorate General of Safeguards has recently made the former proposal. He said that more duty is being charged in order to help the domestic solar module manufacturers. For long, these manufacturers have been sabotaged because of increase in imports.
DGS considered the average cost of sales by the Domestic Industry that was decided by import quantity ratio of modules and cells. After considering the former, he decided that the present import duty present average import prices and a provisional safeguard duty at a rate of 70% ad valorem will be charged on importing solar cells.
This action is a consequence of a plea filed by Indian Solar Manufacturers Association in front of the DGS. The plea stated that the surge in imports of solar cells and modules has indirectly forced numerous domestic producers to keep their production units dysfunctional. Heavy losses and debt have handicapped the domestic industry and thus IMSA appealed for imposition of a provisional safeguard duty for some days.
However, a big part of the industry believes that this decision will only end up harming the end user as this will create a burden on solar original equipment manufacturers (OEMs). OEMs get passed to the end consumer in the final stage. Yes, this will certainly help domestic industry but sustainable future benefits are hard to see.
The new safeguard duty will rise up the cost of projects by astonishing 40%. As a consequence, there will be higher solar tariffs. Safeguard duties and anti-dumping duty are for good purpose in nature but it may not help the industry in the long run.
DGS also noticed in his report that India is a good alternative for China. China has huge production and excess capacities of solar cells, whenever it faces struggles with EU or USA, then they shift the export to a suitable alternative i.e. India.
The hurdle in exporting solar cells to EU or USA is the imposition of protective measures; this shifted the focus of China towards India.
China, Malaysia, Singapore and Taiwan are the major countries for India to buy solar modules; however, china is the exporter of maximum amount of solar cells. There is an increase in the volume of import of solar cells called from China between 2014-15’s 1,275 MW to 2017-18’s 9,474 MW per annum.
The report by DGS ended with the observation that circumstances are critical for domestic industry and they require imposition of Safeguard Duty promptly. If the implementation of the new duty would delay then the circumstances will only aggravate.
The safeguard duty won’t have made an impact to China if it was 2012 as then India’s share in China’s exports was 1.52%. In 2016, the same has increased to 21.58%.
The report by DGS also argues that the trend of increase in volume of imports only suggest that China will keep on having excess capacity and will try to target India.