Loading...

Safeguard duty redux


16 March 2020 | BRIDGE TO INDIA

Safeguard duty redux

The Directorate General of Trade Remedies, under the Ministry of Commerce & Industry, has opened a fresh investigation into solar cell and module imports. The investigation follows an application for extension of safeguard duty by Adani and Jupiter Solar, a local cell manufacturer. Their application seeks continuation of duty for four more years after the current duty expires in July 2020.

  • The case hinges on impact of imports on the business of Jupiter Solar with a capacity equivalent to only about 4-5% of India’s total annual requirement;
  • Uncertainty around time-table of final decision is mitigated by experience in dealing with change in law claims;
  • If the government can take a decisive stand and provide long-term clarity, many Indian and international companies would be willing to make large-scale investments in manufacturing;
The review application has sought to cover SEZ (Special Economic Zone)-based units, where Adani’s 1.2 GW per annum cell and module manufacturing plant is based, in the definition of domestic industry. SEZ-based units were not given benefit of duty protection in the original duty decision and the Director General has again decided to exclude them from the investigation. In effect, therefore, the decision on extending safeguard duty would be based solely on impact of imports on the business of Jupiter Solar, which seems bizarre given that their operational capacity is less than 500 MW, or only about 4-5% of India’s total annual requirement. 
 
Unfortunately, the timetable and process for final decision for such investigations in India is muddled as we saw last time around. The launch of investigation throws the industry into another open-ended period of uncertainty. Hopefully, however, more experience and clarity in dealing with change in law claims should prove useful. Assuming final duty in the range of 20-25%, incremental tariff requirement is estimated at about INR 0.30-0.35/ kWh. The increase seems nominal but may be enough to deter some DISCOMs from procuring solar power.
 
It is clear that improving manufacturing competitiveness of the economy (land and labour reforms, reducing cost of capital, improving infrastructure, developing skills) remains too arduous a task for the policy makers. Even the various measures announced so far (manufacturing-linked tendersPSU scheme, solar pump and rooftop solar schemes) to support domestic manufacturing have proven to be ineffective. The government seems, therefore, pushed in a corner with the prospect of duty protection looking highly likely. The Coronavirus disruption has only added to urgency of ‘Make in India’ quest. Creating trade barriers for the benefit of just one company is hard to understand but seeking self-sufficiency in an industry of vital economic importance must be a sound policy objective.
 
Under the right framework, many Indian and international companies would be willing to make necessary large-scale investments in the sector. We hope that the government can take a decisive stand, make a quick decision and provide long-term clarity to the sector. Simultaneously, it should abandon other ineffective and costly measures to support domestic manufacturing.

Recent reports

India Solar Compass | Q1 2024

India Solar Compass | Q1 2024

This report provides a detailed update of all key sector developments and trends in the quarter – capacity addition, leading players, tenders and policy announcements, equipment prices, financial deals and other market developments. It also provides market outlook for the next two quarters.

India PV Module Intelligence Brief | Q1 2024

India PV Module Intelligence Brief | Q1 2024

This report encapsulates quarterly trends in module demand and supply, import and domestic production volumes, supplier market share, break-up by technology and rating, global market scenario, pricing across the value chain, key policy developments and market outlook.

India Corporate Renewable Brief | Q1 2024

India Corporate Renewable Brief | Q1 2024

This report provides an update on key trends and developments in the corporate renewable market including capacity addition, key players, policy & regulatory issuance, financing, PPA tariffs and other market trends.

Corporate renewable market -alternative procurement options

Corporate renewable market -alternative procurement options

Corporate consumers seeking to increase share of renewable power in their consumption mix have the option of using multiple short-term procurement routes like green power exchange, renewable energy certificates (RECs), I-RECs and green tariffs.

India Solar Rooftop Map | December 2023

India Solar Rooftop Map | December 2023

India Solar Rooftop Map is an info-graphic report providing a snapshot of rooftop solar market in India – capacity addition across states and consumer segments, market share of leading players and other key trends. Total rooftop solar capacity is estimated to have reached 14,484 MW by end of 2023. Total new installations in 2023 are estimated at 2,856 MW, up only 8% over previous year.

India Solar Map | December 2023

India Solar Map | December 2023

India Solar Map 2023 is an info-graphic report covering growth of utility scale solar sector – national and state-wise commissioned and pipeline capacity, leading market players and portfolio details of top 16 project developers. Capacity addition in 2023 fell 51% YOY to 5,924 MW taking total utility scale solar capacity to 59,840 MW. Total project pipeline stands at a record 74,161 MW.

To top