DGTR’s Third Anti Dumping Investigation. Too Little, Too Late?

The announcement by the ministry of commerce and industry of the Directorate General of Trade Remedies (DGTR) starting an anti-dumping probe on imports of solar cells imported from China, Vietnam, and Thailand was made yesterday. The move, while following due process as one would hope, leads to several questions regarding its relevance. Perhaps the only issue might be the impending end of the previously imposed Safeguard Duty (SGD), that is set to end in July this year, after completing a one year extension on its initial two year run from July 2018. With basic customs duty (BCD) at upto 40 percent or more set to be imposed from April next year, the period between  July end to March 2022 was theoretically set to be a zero tariff period, which might have prompted the current investigation to maintain status quo or even increase protection.

However, quite frankly, between ‘reservations’ in CPSU solar schemes, the PM KUSUM schemes, exports and subsidised rooftop schemes, we have seen demand exceeding supply for domestic solar production in recent months. Or projects being deferred on quality issues too.  A move to impose duties would only create space for a higher price at a time when prices are already under upward pressure. Ad-hoc duties and protection from imports for a limited time period have also failed abysmally to strike at the root of the problem. Dominance of Chinese firms across the solar value chain, and failure of a domestic manufacturing base of substance to emerge to challenge it.

The DGTR inquiry is based on the petition filed by the Indian Solar Manufacturers Association (ISMA), the industry body that had been behind previous complaints too. The safeguard duty (SGD) was the first time protection came in, starting in 2018.  The ISMA filed the petition on behalf of the now regular complainants,  Mundra Solar PV (Adani) – a unit in a Special Economic Zone; Jupiter Solar Power, a unit in the Domestic Tariff Area (DTA); and Jupiter International Limited (DTA).

Jupiter International and Jupiter Solar Power have bee considered to be substantial players in the DTA area, with the DGTR estimating that the  production of the two DTA units accounts for a ‘major proportion’ of the total domestic production of solar cells in India.

The key allegation under investigation once again, is that imported solar cells from China, Vietnam, and Thailand being ‘dumped’ in India are causing material injury to the domestic industry. A case that makes them eligible for anti-dumping duty.

The probe will cover the period starting from July 2019 to December 2020 (18 months). The injury period under the probe will cover 2016-17, 2017-18, 2018-19, 2019-20, and the investigation period.

The DGTR notification also claims a positive evidence of price undercutting, price suppression, and price depression effect on the domestic industry.

The solar sector has had a running issue with dumping allegations, and government efforts to balance out support for domestic industry vis a vis higher domestic prices. Solar equipment production has finally made it to the PLI schemes as a critical manufacturing focus too this year.