Government body recommends 25% tariff on Chinese and Malaysian cells and modules

Phased import tariff would fall to 20% 12 months after introduction and 15% for final six months of a proposed two-year period. Industry watchers say the cost of Indian solar energy could rise by up to 30%.

July 17, 2018 Preeti Verma Lal

Solar panels imported from China and Malaysia are typically 25-30% cheaper than domestically manufactured products.

Image: Captain Albert E Theberge/Wikimedia Commons

Citing ‘injury’ to India’s domestic solar industry, the Directorate General of Trade Remedies (DGTR) has recommended a two-year safeguard duty on solar cells and modules imported from China and Malaysia – 25% in the first year, 20% for the first six months of the second year and 15% in the final phase.

Almost 90% of the solar panels used in Indian projects are imported from China and Malaysia, with their price typically 25-30% cheaper than locally made ones.

Other countries exporting solar equipment to India would be exempt from the proposed levy under the DGTR recommendation.

The DGTR – part of the Indian Commerce Ministry – said a 25% duty would protect domestic manufacturers from steep rises in the volume of inbound shipments of panels and cells. In its report, the government body stated the domestic solar industry had suffered from a surge in imports which has seen the domestic share of panel and module sales fall from 10% in 2014-15 to 4% in 2015-16, 8% in 2016-17 and 7% up to September 2017.

“This has caused [a] significant overall impairment to the domestic industry,” states the DGTR report. “The rise in imports – and coinciding serious injury caused to the domestic industry during the injury period – established causality.”

Industry observers believe the proposed move could hinder India’s ambitious solar plans by driving up the cost of solar power 15-30%.

In January, the Directorate General of Safeguards recommended levying a 70% provisional safeguard duty on imported solar panels and modules from China and Malaysia but the recommendation could not be implemented, due to a court order blocking it.

In the past three years India has initiated more than 130 anti dumping, countervailing duty and safeguarding recommendations cases, to deal with perceived unfair trade practices and to provide a level playing field for domestic manufacturers.

And protectionism is gaining traction internationally, with U.S. president Donald Trump applying a 30% tariff on imported solar cells and modules for a year, with duties declining to 15% four years later.

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