The US Department of Commerce has announced preliminary anti-dumping duties ranging from 31 percent to 250 percent on crystalline silicon solar cells from Chinese manufacturers. This will help India become an alternative manufacturing destination.

• The move to protect US manufacturing against Chinese competition is short-sighted
• Chinese manufacturers are expected to look for offshore manufacturing opportunities. India could benefit from that
• Module prices in India are expected to fall further as China will look to offload its inventory

The US Department of Commerce has announced preliminary anti-dumping duties ranging from 31 percent to 250 percent on crystalline silicon solar cells from Chinese manufacturers, although final ruling from the commerce department is expected only in October. If the final ruling in October goes against Chinese manufacturing, Chinese government will appeal to the World Trade Organization by objecting to the US government findings.

The US unit of Solar World along with the Coalition for American Solar Manufacturing (CASM) had filed a petition for imposing anti-dumping and countervailing duty on Chinese crystalline silicon solar cells. This petition was filed with the US Department of Commerce and the US International Trade Commission (ITC). The petitions demonstrated that Chinese manufacturers are receiving illegal subsidies and are illegally dumping crystalline silicon solar cells into the US market.

To circumvent the US trade barriers, in the short term, many Chinese and other international companies manufacturing in China are also expected to use the tolling services of Taiwan-based suppliers to turn wafers into cells there, and then assemble the modules in China. Module suppliers with manufacturing facilities in south east Asia, India and low-cost manufacturing destinations, who might not be as competitive as the Chinese manufacturers, are also likely benefit from this ruling.

Polysilicon manufacturers in US now fear that China will retaliate with slapping tariff when they announce findings of an investigation into subsidies of solar companies by US states.This is a short-sighted move by the US and is not expected to boost the US solar industry. US might actually end up losing down the stream jobs.

What does this mean for India?

Like many others, the Indian solar manufacturing industry has been unable to adapt to low prices and mass-manufacturing and has seen its export orders dry up as it finds itself unable to compete with global suppliers, leave alone the allegedly subsidized Chinese manufacturers. India has waived off import duties on solar cells and modules to promote solar power generation. Indian solar manufacturers’ only hope of survival right now is the domestic market. They have been lobbying to get basic import duties implemented on imports from China. The government has been rejecting their demands till now, but the US ruling is likely to give more voice to their arguments.

With the US protectionism, the price of solar is expected to increase in the US, but in an already oversupplied international market, Chinese manufacturer will look to offload their inventory in other markets like India. Indian developers might benefit from the lower prices in the short term. Overall, like all other trade barriers, this will also create price anomalies across markets.

India also has the advantage of low cost manufacturing and an additional benefit of domestic content requirement for the National Solar Mission (NSM). Manufacturing in India as compared to China, will not only help companies avoid US tariffs, it will also help them get a large share of the Indian market. This might push India as an alternate manufacturing destination. It will not be easy though. The government will need to give a clear and long term strategy on promoting solar manufacturing in India.

What does it mean for the solar industry?

At the time when solar power is starting to become competitive with conventional power in several locations across the world and when the solar industry is expected to unite to improve technology and aim for affordability, the solar community is divided and embarking on a trade war. This trade war will find some companies and even countries winning and some losing in the short-term, but in the long-term, if we focus on restrictions and look away from the real challenge of trying to free solar of subsidies, the whole world will stand to lose.