Safeguard Duty Could Hurt India's Solar Prospects

India has imposed safeguard duty on solar cells imported from China and Malaysia, in a move that would provide relief to the domestic manufacturers but could put off interested investors and impact the government’s solar generation programme.

 

Increasing solar generation capacity to 1 lakh MW by 2022 is the part of India comprehensive national climate action plan. If the solar programme derails, country’s emission reduction plan could get impacted.

 

The Director-General of Trade Remedies (DGTR)  has recommended 25% duty in the first year, 20% for the first six months of the second year and 15% for the last six months. It has recommended exempting the US, UK, Taiwan and other suppliers from proposed additional duty.

 

Solar power tariff in India has fallen by nearly 80% since 2010, hitting a record low of Rs 2.44 a unit in May 2017, on the back of cheaper equipment imports.

 

China and Malaysia together account for 90%  of solar cells imported into the country. With local manufacturers not in a position to make up for the sudden loss of supply, solar cell prices could shoot up.

 

If that happens, under-construction projects with over 6,000 MW could be rendered unviable. Fresh investments too could be hurt.

 

Safeguard duty is a temporary measure to protect the domestic industry from injury due to increased imports.

 

The DGTR has recommended safeguard duty on a petition filed by the Indian Solar Manufacturers Association (ISMA).

 

In what could a sign of things to come, uncertainty triggered by the looming safeguard duty had forced states like Maharashtra and Karnataka to defer bidding for solar projects earlier this year.