The Indian solar industry is certain an anti-dumping duty (ADD) on solar cells and modules coming from China, Taiwan and Malaysia will benefit local manufacturers. This duty has the potential to make the Indian solar module manufacturing price competitive globally, but the authorities must act fast and impose it as early as possible.
By Shruti Mishra
Renewable energy now accounts for over 18 per cent of the total installed capacity in India, with solar alone comprising nearly 4.5 per cent. The Indian government aims to make the solar industry a strong alternative to the conventional electricity grid to lower the country’s carbon emissions. But the ‘Make in India’ drive has not resulted in any significant success stories in the solar sector, as yet. Approximately 85 per cent of India’s solar equipment manufacturing and generating industry is still dependent on cheap imported raw materials from countries like China and Taiwan.
Many local manufacturers believe that to fulfil the government’s ambitious 100GW of solar energy capacity by 2022, relying on imports is not a sustainable option, if the industry is to avoid experiencing any supply glitches. What’s worsening the situation further are the clauses added to government tenders that favour imported modules, giving them a competitive edge over their domestic counterparts.
Such a situation is intensifying the dire need to implement the anti-dumping duty (ADD) which will protect the domestic solar ecosystem of our country. More than just being a trade barrier, the ADD will prove to be a strong support for the local solar module and cell manufacturers, particularly as the industry is on the cusp of major changes. Any delay in action will hamper India’s dream of becoming a solar manufacturing hub.
A five-year struggle
The first time the anti-dumping issue was raised was back in 2012, when Indian manufacturers filed an application with the Directorate General of Anti-dumping and Allied Duties (DGAD), alerting the government that international photovoltaic suppliers were selling below cost, eroding Indian manufacturers’ share of the market. By the end of 2015, the cheap imported solar modules covered 90 per cent of the Indian market. To restrict this expansion, Indian cell manufacturers again requested the government to put in place anti-dumping duties on the import of solar cells in September 2015. But again, no concrete action was taken.
The third and the most recent attempt to appeal for government support was on June 5, 2017, when the India Solar Manufacturers Association (ISMA) filed the anti-dumping petition against solar imports from China, Taiwan and Malaysia. The industry has been in turmoil since then, as the players are not getting an idea about the pace with which they need to revamp their production capacities. In addition, the duty rates are still not clear. A report by Mercom India Research points out that anti-dumping recommendations were initially expected to be announced on September 22, 2017. The investigations are still pending at DGAD, which may take one more year to arrive at final conclusions. Needless to say, this delay in the anti-dumping case ruling will create further uncertainty in the sector and drag down local manufacturing to levels it may never recover from.
ADD benefits
Once the anti-dumping duty is enforced, the job creation rate will increase exponentially for the indigenous workforce. “Currently 85-90 per cent of solar modules are being imported, leading to a forex outflow of nearly US$ 3 billion in FY 16-17. Enforcing the ADD will boost the demand for indigenous modules manufactured by domestic companies, leading to the creation of new jobs, while reducing huge forex outflows,” says Karunesh Chaturvedi, head (corporate affairs), Vikram Solar.
If we go by the data from the Ministry of New and Renewable Energy (MNRE), solar modules adding up to a generating capacity of 8.5GW are being manufactured in India. In the case of solar cells, manufacturing to the extent of 3GW is currently happening in India. This clearly shows that cell manufacturing capacity is extremely low when compared to solar module manufacturing. This scenario is making local module manufacturers excessively dependent on imported cells. The ADD will make the Indian solar cells and modules more competitive, and enable local cell manufacturers to increase their capacity and bridge the supply gap. Module makers will then get an instant local supply of solar cells, which will enable them to hit the market with their finished products on time.
Market reactions
Sunil Rathi, head of sales, Waaree Solar, says that the positive side of solar manufacturing in our country is the quality of our products. “You will hardly see an Indian solar manufacturer’s product fail anywhere in the country. Most of the people have understood the manufacturing business and are mature enough now,” he adds. Therefore, after implementing the anti-dumping duty, local solar equipment makers don’t have to worry about the quality of solar cells, which sometimes gets compromised in the present scenario that is driven by cheap, high volume imports.
When asked about how the sudden imposition of the anti-dumping duty would impact the domestic market, Rathi says, “Whenever this anti-dumping duty is implemented, there will be a small increase in prices initially, but this will settle down later. So, the disruption will be for a very short period.”
Just to make sure that the ADD does not create further disruptions, Chaturvedi suggests that this policy should be implemented rationally. “We (Vikram Solar) are recommending a higher per cent of duty on modules and a lower percentage of duty on cells, as this approach will benefit the local manufacturing ecosystem,” he adds.
