Solar Cells in Focus as DGTR Initiates Review of Safeguard Duty

Following a representation by Indian manufacturers of solar cells, the Directorate General of of Trade Remedies(DGTR) has started a review of the Safeguard Duty(SGD) that was put into place in 2018, on imports of solar cells, mostly targeting China.

A review in this case would typically cover the effectiveness of the SGD  that was imposed in protecting Indian producers, besides the feasibility and requirement to extend the same for the future too.

It goes without saying that in India, the camps in favour of, and against SGD are firmly divided between developers and manufacturers. Developers have been against it, for obvious reasons like cheaper imports from China, while manufacturers have raised the issue of Chinese dumping to make their case. with the sector assuming strategic importance for the country’s Energy security, and the massive build up planned, the manufacturer’s won the battle, when the SGD was finally applied in 2018.

In July 2018, the  duty had been notified by the finance ministry, targeting imports of equipment from China and Malaysia, initially for a 2 year period, that is set to end on July 29 this year.
As per the notification , 25 per cent safeguard duty was imposed from July 30, 2018 to July 29, 2019, which was reduced to 20 per cent during July 30, 2019 to January 29, 2020 and 15 per cent during January 30, 2020 to July 29, 2020.

It is this protection that domestic manufacturers, notably Mundra Solar, Jupiter Solar Power Ltd, and Jupiter International Ltd, through the Indian Solar Manufacturers Association (ISMA) have sought to be extended or replaced with a higher duty in fact.

At various times during the past 12 months,  we have heard the government declare its intent to offer protection of upto 30 percent duty on imports for domestic manufacturers, especially those setting up manufacturing here. The budget for 2020 added the option to ‘assemble in India’ in a sign of extra flexibility to ensure better control and benefits from the investment into Solar power.

With a massive push being made for energy storage manufacturing too, success in either could help pave the way for success in the other . Industry players claim that tenders with DCR (Domestic content requirements) for total capacity upto 3 GW or more per annum can be serviced by domestic manufacturers today, even as key component suppliers like inverter makers and more have already started production here. That leaves a sizeable gap of 5 to 12 GW per annum to be filed in by imports, unless some of the Chinese manufacturers themselves see the attractions of assemble in India and change the equation.

Last month, indications provided to us at an industry event by government officials had indicated that for regular imports, duty structure will definitely not exceed 25 percent, the peak rate of SGD, with a decision to be taken on possibly keeping it at a lower level. Their argument was that the lower corporate tax rate on new manufacturing units has made it a much more viable opportunity to build/assemble in India finally.