Indian developers are hoarding Chinese solar cells; here’s the reason why

By: |
Updated: Jul 19, 2018 5:20 PM

India’s plan to cut imports of Chinese solar cells and modules by imposing a safeguard duty may have the opposite effect in the short run, according to ICBC International Research Ltd.

Transparent solar cells, Transparent solar materials, solar cells, solar materials, invisible light waves, bulkier rooftop solar units, transparent solar applications, transparent luminescent solar concentratorIndia will continue to rely heavily on imports from China over the next one to two years as imports will remain cheaper than domestic production even with the tariff.. (Image: Reuters)

India’s plan to cut imports of Chinese solar cells and modules by imposing a safeguard duty may have the opposite effect in the short run, according to ICBC International Research Ltd. Stockpiles could rise rapidly as Indian developers hoard more modules before the proposal to impose a 25 percent safeguard tariff is expected to take effect in the next two to three months, ICBC’s Hong Kong-based analysts including Harry Wong said in an emailed note Thursday.

The South Asian nation will continue to rely heavily on imports from China over the next one to two years as imports will remain cheaper than domestic production even with the tariff.

India’s expansion of manufacturing capacity “has been sluggish due to higher development cost and hence it is hard for current capacity to catch up with the downstream demand” arising from the government’s target to install 100 gigawatts by 2022, Wong said. The tariff is likely to harm domestic project developers, raising costs by at least 12 percent, without affecting China’s position as the key supplier of panels and modules.

The country earlier this week recommended a two-year safeguard duty on solar cells from China and Malaysia to protect its nascent domestic manufacturing industry. India’s annual solar cell manufacturing capacity of 3 gigawatts means it can only meet 15 percent of its annual installation target of 20 gigawatts, the Ministry of New & Renewable Energy estimated last year.

The South Asian nation accounted for 31 percent of China’s total solar exports in 2017 becoming its largest buyer, according to the China Chamber of Commerce for Import and Export of Machinery and Electronic Products.

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Monsoon rains start to fade in August; but kharif acreage provides glimmer of hope
2Coronavirus worsens India’s child-labour issue; forces children out of school to work
3Stimulus 2.0 expected by September-October: To likely focus on employment guarantee for urban poor