Cheap Solar Modules’ Import Rises As China Misuses FTA Route

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  • Imports of solar panel modules from Vietnam and Malaysia have surged between April and August 2023
  • New Delhi aims at boosting domestic production and reducing Chinese imports

Indian solar panel manufacturers face a significant challenge due to the huge quantity of affordable Chinese imports routed through intermediary countries like Vietnam, Malaysia, and Singapore to exploit Free Trade Agreement (FTA) loopholes for export to India.

Despite New Delhi’s implementation of a 40% customs duty on solar modules and a 25% duty on solar cells in April 2022, aimed at boosting domestic production and reducing Chinese imports, Chinese companies have found ways to circumvent these high tariffs and maintain their supplies to Indian solar farm developers.

This strategy of bypassing local tariffs has been effectively utilised by Chinese companies in the past, as demonstrated by a year-long investigation by US federal authorities in August 2023. The investigation revealed that five Chinese solar panel firms had evaded tariff regulations by conducting their operations in Cambodia, Malaysia, Thailand, and Vietnam.

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While the direct exports from China to India have decreased following the imposition of tariffs, imports of solar panel modules from Vietnam and Malaysia have surged between April and August 2023, accounting for a significant 60% of all such imports into India. It’s worth noting that most of these products originate from Chinese companies. Indian manufacturers are raising concerns about these imports, asserting that they adversely affect the domestic industry, as Chinese firms resort to dumping their products by exploiting the FTA route.

Indian solar panel manufacturers continue to grapple with the challenge of cheap Chinese imports being funnelled through intermediary nations to bypass tariff restrictions. Despite India’s efforts to boost domestic production through tariff imposition, the Chinese companies are adept at finding alternative routes to maintain their market presence in India, ultimately impacting the local solar panel industry. This issue underscores the need for ongoing vigilance and regulatory measures to protect India’s domestic solar manufacturing sector from such trade practices.

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