Clearing the way for the imposition of safeguard duty on solar cell imports, the Supreme Court on Monday vacated a stay by the Orissa High Court. Following the HC stay, the finance ministry, on August 13, had to suspend the implementation of a safeguard duty on imported solar cells. The Orissa HC, hearing a writ petition against the duty filed by local solar plant developers, had barred the government from imposing it till August 20, but the government went ahead and slapped the 25% impost on July 30.
The duty on solar cells — the basic ingredient needed to manufacture solar panels — was imposed for a year, ending July 19, 2019, and the tax was to reduce to 20% for the six months till January 29, 2020, and 15% for the subsequent six months. The step is seen to increase solar tariffs by 50 paise per unit, as per CARE Ratings, effectively discouraging electricity distribution companies (discoms) from buying solar power going ahead.
Apart from developers, the duty is expected to hurt domestic manufacturers based in special economic zones (SEZs), which currently accommodate 40% of 10 giga-watt (GW) of solar module manufacturing units and 60% of 3 GW of cells production base. However, domestic manufacturers believe that this step would salvage the industry, currently stressed with facing uneven competition from cheaper imports.
“During the initial phase, we anticipate a diversion of approximately 30 to 40% of the demand for solar cells and modules towards the
Indian manufacturers,” said Sunil Rathi, director, Waaree Energies. Imported solar modules are 8-10% cheaper than those made in India, making them vital for cheap renewable power — solar modules comprise about 60% of total project costs. About 88% of module requirements are met through imports.