India launches probe against China, Thailand and Vietnam

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May 17, 2021 8:19 AM

Solar cells are the basic ingredient used in the manufacturing of solar modules and Chinese products are 15-20% cheaper than their Indian counterparts.

tradeThe United States was the second FDI generator at 23 per cent and Mauritius third at 9 per cent.

The commerce ministry has initiated an anti-dumping investigation against the import of solar cells from China, Thailand and Vietnam. The investigation was triggered by an application by the Indian Solar Manufacturers’ Association (ISMA).

Solar cells are the basic ingredient used in the manufacturing of solar modules and Chinese products are 15-20% cheaper than their Indian counterparts.

The notice issued by the directorate general of trade remedies said that prima facie evidence of dumping was found against the aforementioned product of the above countries, leading to injury to the domestic industry. Low module prices have played a major role in bringing solar tariffs down to the current low of Rs 1.99/unit, but it has kept the domestic solar sector relied on imports and local manufacturers have found it difficult to sell their products.

A similar anti-dumping investigation against the import of solar cells from China, Taiwan and Malaysia was initiated by the government in July, 2017 but was eventually called off in March, 2018 on ISMA’s request.

To boost domestic manufacturing, the Centre had imposed a 25% safeguard duty on solar imports from China and Malaysia in July 2018 for two years, which was extended to July 2021, at a rate of 15%.

As FE reported earlier, after the safeguard duty imposition on China and Malaysia, solar imports had since surged from Vietnam and Thailand. Between FY18 and FY20, imports of solar cells and modules from Vietnam and Thailand recorded a growth rate of 800% and 5,750%, to $136 million and $117 million, respectively. Import of Chinese products have fallen 60% to $1.3 billion in the same period.

Overall solar imports have come down by 72% annually in April-February FY21 to $468.5 million due to the Covid-19 restrictions, as the pace of solar capacity addition also dwindled to 5 giga-watt (GW) in the same period, down by about 45% annually.

From the beginning of FY23, solar module and cell imports will attract a basic customs duty (BCD) of 40% and 25%, respectively. However, procurement of these items from China is seen to surge significantly in the last three quarters of FY22 as there will be no import barriers in place after the safeguard duty regime ends in July. The government has introduced the Rs 4,500-crore production-linked incentive scheme for solar module manufacturing, which analysts at India Ratings said, will push the sales of 20 GW of domestic product from the output capacity developed under the five-year programme.

As on date, the domestic cell manufacturing capacity is around 3 GW and module making capacity is 10 GW

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