India Mulls 25% Safeguard Duty on Chinese, Malaysian Solar Panels

In the last few years, India’s power producers have quoted solar power tariffs lower than that of thermal power riding on cheaper imports from China and Malaysia. Domestic manufacturers have complained that such cheap imports have been harming their businesses.

New Delhi (Sputnik): To protect the domestic solar panel industry, India is mulling imposing a 25 percent safeguard duty on solar panels imported from China and Malaysia. If the committee led by India's finance secretary, Hasmukh Adhia, accepts the recommendation by the Directorate General of Trade Remedies (DGTR) it could lead to a sharp hike in the cost of solar power.

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The proposed safeguard duty would be effective for two years wherein the duty would be reduced in the second year to 20 percent for six months and then 15 percent for the remaining six months.

Indian solar cell and module manufacturers had claimed that cheap Chinese imports were hurting the domestic industry, though Chinese manufacturers claim that cheaper solar panels have provided a major fillip to India's solar power mission. 

"The Indian industry can only satisfy 10-15% of the Indian demand. The remaining demand has to be met by imports to meet the target under the National Solar Mission. Imports have nothing to do with the injury suffered. The real cause of injury to the domestic industry is aggressive pricing practices of other Indian producers and not imports. Backward integration in this manner will only lead to higher cost in the next few years," the China Chamber of Commerce for Imports and Exports of Machinery and Electronic Products said in its response to India's Ministry of Trade. 

Meanwhile, India's leading solar power generator, ACME, told the Indian government that solar modules constitute more than 50 percent of the components required for setting up a solar power plant and are, therefore, critical to the industry.

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"Due to delay, most projects will fail to take off and banks will be reluctant to infuse funds in light of uncertainty over the levy of a safeguard duty," ACME has warned.

India's total utility-scale solar capacity grew by over 70 percent in 2017-18 to reach 21.3 GW. India has envisaged increasing its capacity by 1 lakh MW by 2022. The program has accelerated in the last two years thanks to decreasing tariffs. Government data suggests that solar power tariffs in India have fallen by nearly 80 percent since 2010, hitting a record low of INR 2.44 a unit in May 2017, on the back of cheaper Chinese equipment imports.