The solar industry is abuzz with news that the Centre will soon announce a ‘safeguard duty’ on solar modules imported from China. Sources in the industry noted that the move could also serve as a means of hinting to the Chinese, India’s arsenal of economic response to the border stand-off.
‘Surge’ in imports
Industry sources said the government prefers the safeguard duty over the anti-dumping duty because, for the anti-dumping levy, the government would first have to prove dumping or sale below manufacturing costs. Safeguard duty, in contrast, is the levy that the World Trade Organisation rules allow a country to impose on imports when there is a sudden surge in imports from a country. Imports of solar modules from China is a classic case of ‘surge’. In the five years between 2012-13 and 2016-17, when India’s solar module imports rose four times, imports from China increased seven times. Also, the share of solar modules in India’s total imports from China increased during the period, from just 0.75 percent in 2012-13 to 4.60 percent last year. Anand Kumar, Secretary, Ministry of New and Renewable Energy, told Business Line that the government is determined to do everything possible to support the domestic industry, but did not wish to comment on specific measures. He said a safeguard duty was one of the options with the government. However, one industry source said the Centre’s reasoning was that even if solar power cost would increase 30-40 paise due to the safeguard duty, it wouldn’t matter much — after all, solar power today costs so low that the rise would not affect its competitiveness. Narendra Surana, Managing Director, Surana Solar, a solar module manufacturer, said the domestic solar manufacturing industry badly needs a breather. He said the workforce in his company had been cut to a fourth of its size in the last one year.
Pranav Mehta, Chairman of Solar Energy Association of Gujarat, said the industry is not asking for protection, but a level playing field. “Inflow of cheap modules, supported by (Chinese) government subsidies, has harmed the Indian module-manufacturing sector in the past five years,” said Gyanesh Chaudhary, Managing Director and CEO, Vikram Solar, one of India’s leading module makers.
Indian companies are small in terms of manufacturing capacity, but they have to compete with Chinese companies such as Trina, JA Solar, and Yingli, which have huge capacities — around 5GW worth of modules. Vikram Solar, however, wants the government to impose the safeguard duty only on imported modules and not imported cells. (Cells are used to make modules, and Indian companies typically import cells and make modules.) India has a cell-manufacturing capacity of 1.7GW, but the module-making capacity is about 7.5GW, Choudhary said.