The Directorate General of Trade Remedies (DGTR) has been notified by the Ministry of Finance to impose safeguard duty on solar panels imported from China and Malaysia. The duty came into effect from July 30.
Economic Times reported that more than 90 percent of solar panels and modules used in Indian solar projects come from these two countries. The DGTR had recommended the imposition of 25 percent safeguard duty on solar panels from these two countries about two weeks ago for a tenure of one year, followed by 20 percent for the next six months and finally 15 percent for another six months. The decision was taken keeping in mind the Indian solar manufacturers who were witnessing immense manufacturing challenges due to the import.
In December 2017, the Indian Solar Manufacturers Association (ISMA) issue a concern which stated that indigenously made solar cells and panels, which constituted just 10 percent of Indian solar projects in 2014-15, had fallen even further in the subsequent years. This was primarily because solar developers preferred Chinese and Malaysian solar equipment, as it was cheaper than that manufactured in India.
Solar manufacturers had been opposing strongly on the grounds that it would raise tariffs, as they would have no option but to pass on the extra charge to discoms and ultimately consumers. As a result the major threat was that this in turn might slow down India’s ambitious solar program which aims to have 100,000 MW of solar capacity by 2022. They noted that local manufacturers do not have sufficient capacity to meet their needs.
Solar tariffs are currently at around Rs 2.75 per unit, on par with that of thermal power, but safeguard duty is expected to raise it by at least 50 paise, according to developers.