Solar equipment manufacturers and developers spar over safeguard duty

By: | Published: June 27, 2018 12:38 AM

Domestic solar equipment manufacturers want the safeguard duty threshold to be raised to 95% on imported solar components.

Imported solar modules are 8-10% cheaper than those made in India, making them vital for cheap renewable power. (PTI)

At a public hearing held by the office of the Director General of Trade Remedies (earlier known as Director General of Safeguards) on Tuesday, domestic solar equipment manufacturers asked the safeguard duty threshold to be raised to 95% on imported solar components. The Director General of Safeguards, after preliminary investigations, in December 2017 had proposed to impose a provisional 70% safeguard duty on solar cell imports for 200 days. The investigation was triggered by an application of probe filed by the Indian Solar Manufacturing Association (ISMA).

Solar plant developers, which depend heavily on cheaper imported products pointed out that the imposition of the duty would raise costs, delay solar capacity building and make it impossible to achieve 100 GW solar target by 2022. The stakeholders have been asked to file their additional comments and rejoinder to DGTR by July 2, a source present at the hearing told FE.

ISMA claimed that not imposing a safeguard duty, while the country is on its way to add 9,000 MW solar power capacity in 2018, would mean giving away market opportunity worth Rs 21,500 crore to China, Taiwan or Malaysia. However, representatives from China and Taiwan are learnt to have pointed out that the domestic manufacturing capacity was not sufficient to meet the burgeoning demand coming from the solar industry. India’s production capacity for solar cells stands at 3.2 GW and that for modules at 8.5 GW.

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.

While ISMA estimates that a duty of 20 cents/Wp, power tariffs would rise by Rs 0.70 per unit, solar developers claim that the said duties could raise tariffs by Rs 1.10 per unit. Research firm Bridge to India had estimated that a 70% safeguard duty would necessitate a hike of Rs 0.90 per unit in solar tariff (35%) to restore pre-duty financial returns on projects.

Representatives from the European Commission said to have noted that the domestic solar component manufacturing was already loss-making even before the surge in Chinese imports from FY15.

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