Safeguards duty can hurt India’s solar goal: China
Importers want SEZ units in India to be kept out of safeguards duty matter
Chinese solar panel manufacturers have warned India that its plan to have a generating capacity of 100 GW will be derailed if India goes ahead with a safeguards duty.
In the final public hearing on assessing the impact of imported solar cells and modules on the domestic manufacturing industry, Indian solar manufacturing upped the ante by asking a 95 per cent safeguards duty on imports.
On the other side were the Indian project developers and more than a dozen importers from China, Taiwan, Canada, etc who said any safeguards duty would be detrimental to India’s solar target.
Some domestic manufacturers such as Adani Green Energy and Vikram Solar operate in a special economic zone (SEZ). Importers asked the Indian government to keep them out of the case.
“If Mundra Solar (Adani Green Energy) is included, the losses of the Indian industry are higher than when it is not included,” said a representative from Canada.
If losses are high, it would lead to a higher safeguards duty on importers. Vikram Solar, which is another manufacturer in the SEZ, asked for a “tariff rate quote” for a specific amount of solar module manufacturing in the SEZ, no which no duty should be levied.
Manufacturing units in SEZs are considered to be on a par with foreign companies and hence the safeguards duty, if imposed, would hold good for them too.
Representatives from China, which is the largest solar panel exporter to India, said the safeguards duty was inconsistent with India’s long-term goals of India of building solar capacity. “China said that over-protection was disadvantageous for India and that their imports fell under trade regulations and have not caused any injury,” said a source in the know.
The Indian Solar Manufacturers Association (ISMA) in a public statement after the hearing said India was missing out on a multi-billion opportunity by allowing imports of inputs from countries such as China, Taiwan and Malaysia.
“Indian manufacturers are making solar power economical to ensure energy security for the nation. India is estimated to add a solar capacity of 9,000 MW in 2018 and will give away market opportunities worth ~215 billion to China, Taiwan or Malaysia at the cost of interests and employment of national capital and labours.”
In its application the ISMA has estimated that with a duty of 20 cents/watt, the increase in power tariffs will be ~0.7 per unit. Project developers, however, have calculated the increase to be ~1-1.5 per unit.
The 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 manufacturing capacity is operational owing to low demand. Of the total solar power generating capacity, more than 80 per cent is built on imported cells from China, and 10 per cent on those from the US. The balance is domestic. India's current solar power installed capacity is 21,000 MW.
The ISMA last year filed an application with the government, saying imported solar cells had flooded the market, causing injury to the domestic industry. The association urged a safeguards duty.
The Directorate General of Trade Remedies chaired the hearing with representations from the ISMA, Indian power project developers and their associations, and trade associations and government officials of China, Taiwan, Europe, and the US.