Saturday, January 28, 2023
HomeEconomyIndia solar duty fails domestic producers as demand languishes

India solar duty fails domestic producers as demand languishes

Text Size:

In 2018, India imposed a 25 per cent tariff on solar cells and modules imported from China and Malaysia for two years. 

New Delhi: India’s bid to protect its solar-equipment makers by imposing a safeguard duty on cheap, Chinese imports has failed, according to domestic manufacturers, who are campaigning for tougher measures.

The country last year imposed a 25 per cent tariff on solar cells and modules imported from China and Malaysia for two years. That has resulted in developers either stalling projects to circumvent the two-year timeframe or sourcing cheap imports from Southeast Asia, the Indian Solar Manufacturers Association and equipment makers including Waaree Energies Ltd., Jupiter Solar Power Ltd. and Vikram Solar Ltd. said.

“There is a duty, yet it’s not fulfilling its role,” Jupiter Solar Chief Executive Officer Dhruv Sharma, who is also a member of ISMA’s governing council, said. “No new manufacturers came in, new capacity hasn’t come in, people are shutting shop, employment hasn’t been generated.”

More stringent measures are needed including the addition of anti-dumping and countervailing duties to the safeguard tariff, according to ISMA General Secretary and IndoSolar Ltd. CEO Rahul Gupta. The industry body last year withdrew a petition seeking anti-dumping duties on imports of solar cells and modules, saying at the time it would file a fresh one.

“We are working on an option of filing an anti-dumping petition. Documentation is getting ready and data is being collected,” Jupiter Solar’s Sharma said.

India, which overtook Japan as China’s biggest solar panel export market in 2017, has been struggling to spur its domestic manufacturing industry. Local producers can meet just 15 per cent of the country’s annual requirement, according to government estimates. It imposed the safeguard duty, with effect from 30 July, saying overseas supplies have caused or threatened “serious injury” to manufacturers at home.

Southeast Asia imports

While imports from China have halved from a year earlier in the April-November period, shipments have risen nearly five-fold from Vietnam and by 26 times from Thailand, latest data from the commerce ministry show. Rising imports from these Southeast Asian countries are posing a new challenge for the local industry, according to Sunil Rathi, a director at panel maker Waaree Energies.

“Because of this, we are not getting the relief we expected from safeguard duty,” he said in a phone interview.

Imports from Southeast Asia are expected to rise further as the manufacturing capacity set up in the region to sidestep the European Union’s trade barriers on Chinese imports will now be directed toward India after the EU lifted the restrictions in September, according to Bloomberg NEF’s Hong Kong-based Yali Jiang. Chinese companies have set up manufacturing capacity of about 12 gigawatts for solar cells and 14 gigawatts modules in Southeast Asia, she said.

Solar project developers in India are also expected to build less capacity to avoid the safeguard tariff that has increased the capital cost of solar projects, translating into lower orders for domestic manufacturers.

“If imports from China have come down, it’s because projects have stalled,” said Gyanesh Chaudhary, chief executive officer of module maker Vikram Solar Ltd., adding that recent price cuts by Chinese manufacturers have nullified the impact of the safeguard tariff. –Bloomberg

Also read: China’s new solar policy may delay India’s panel-making plans

Subscribe to our channels on YouTube & Telegram

Support Our Journalism

India needs fair, non-hyphenated and questioning journalism, packed with on-ground reporting. ThePrint – with exceptional reporters, columnists and editors – is doing just that.

Sustaining this needs support from wonderful readers like you.

Whether you live in India or overseas, you can take a paid subscription by clicking here.

Support Our Journalism

Most Popular