Expiry of safeguard duty: Boon for solar developers, bane for manufacturers

Source: Business Standard 


The decision of the center to impose a basic customs duty from April 2022 and the expiration of the existing safeguard guard duty will result in higher solar imports. This move will benefit solar plant developers, but create more problems for domestic manufactures.  


Indian solar cell and module makers may see difficult times ahead with no protection from imports till April next year. Safeguard Duty (SGD) was imposed on solar cells and module imports for the past two years, which expired last month. 

Moreover, the Basic Customs Duty (BCD), announced by the Centre, will kick in only after 9 months. For solar project developers, it’s a boon as they would be able to import before the BCD is enforced.

About India’s Solar Sector:
  • According to industry data, India has 3,100 Mw of cell manufacturing capacity and 9,000 Mw of module manufacturing capacity. India’s installed capacity of solar power stands at 39.08 Gw (including ground-mounted and rooftop).
  • The country aims to have 100 Gw of solar power capacity by next year.
  • There is a price difference of about 10-20 percent between Indian and Chinese solar cells and modules
  • India imports close to 90 percent of its solar cells and modules and nearly 80% of this is from China. 
Benefits for Solar project developers:
  1. The 9-month duty-free period gives a much-deserved breathing space to Indian solar developers. They would be able to import cheaper modules from China. 
  2. This will cause a reduction of close to 15% in solar tariffs. Further, more projects and new players would enter the business.
Issues for Manufacturers:
  1. The manufacturers are already unable to compete with cheap imports. Many of them have complained against the dumping of solar imports from China, Vietnam, and Taiwan.
  2. At present, domestic manufacturers lack orders and are running below optimal capacity.
  3. In such a scenario, a duty-free period of 9 months will make sustenance for local manufacturers extremely difficult, as they will be left with almost nil orders to continue production.
  4. Further, they will have to continue paying hefty duties on imported raw materials, thereby being unable to compete with internationally-produced modules.

The Centre can impose an anti-dumping duty to create a level-playing field for domestic module manufacturers. This will provide the much-needed relief to the material injury caused to the domestic sector and also help in protecting over 300,000 jobs.

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