25% safeguard duty likely on Chinese solar cells
The Centre is likely to impose safeguard duty of 25 per cent on solar cells imported from China and Malaysia for the coming two years. Exempting all other exporting nations such as the US, the UK and Taiwan, the Directorate General of Trade Remedies in a gazette notification has recommended 25 per cent duty in the first year, 20 per cent for the first six months of the second year and 15 per cent for the balance six months.
The Indian government is likely to impose a safeguard duty (SGD) of 25 per cent on solar cells and modules imported from China and Malaysia for the coming two years, increasing the cost of more than 85 per cent of the solar capacity in the country.
Exempting all other exporting nations such as the US, the UK, and Taiwan, the Directorate General of Trade Remedies (DGTR) in a gazette notification has recommended 25 per cent duty in the first year, 20 per cent for the first six months of the second year, and 15 per cent for the balance six months.
The imposition of duty would be notified by the Department of Revenue, Ministry of Finance. The DGTR has not notified duty on the three solar cells and module manufacturers in the special economic zone (SEZ) area – Adani Green Energy, Vikram Solar, and Websol Energy.
The notification said the issue of levy of SGD on sales/clearances by SEZ units falls under section 30 of the SEZ Act and Section 8B of the Custom Tariff Act, 1975, and hence “required to be dealt by the relevant competent authorities and outside the purview of this investigation.”
“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 ~2.5 per unit and above. “The final solar power tariff would now shoot above ~3 per unit,” said a solar power producer, adding that in case of roof-top solar projects, the tariff would be more than ~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.