US tariffs to have nominal impact on Indian module manufacturers

05 June 2019 |

The US government has decided to end generalised system of preferences (GSP) to Indian exports from June 5, 2019 onwards after keeping the move on hold in light of the ongoing general elections in India. GSP allowed preferential duty-free imports of solar cells and modules into the US from India.

Under the new regime, a tariff of 30% is applicable on module imports in the first year. The tariff would reduce by 5 percentage points every year until the 4th year and stabilise at 15% thereafter. The levy of tariffs shall erode price arbitrage enjoyed by Indian manufacturers compared to Chinese and Vietnamese players. As a result, we expect the Indian manufacturers to lose market share to their international competitors. Indian exports to European markets have already been hurt post lifting of minimum import price (MIP) restrictions on Chinese manufacturers in 2018.

Exports account for a significant share of some manufacturers but the total quantum is relatively small at about USD 120 million (approximately 600 MW) per annum, about 25% of annual production or 6% of total domestic demand. US accounts for nearly half of total exports, so it is possible that export volumes may shrink by 150-200 MW annually as a result of the US move.

Figure: Indian solar module export destinations, April 2018-February 2019

Source: Ministry of Commerce, Government of India

Even though US levies will hurt some manufacturers in the short-term, the long-term impact of this move is expected to be minimal. The Indian government has announced various initiatives including 12 GW PSU scheme, 25 GW solar irrigation scheme (KUSUM) and 4 GW residential rooftop solar scheme, mandating usage of domestically manufactured cells and modules. Even mild progress on these schemes shall more than compensate for the loss of US export volumes.


Recent reports

India Solar Rooftop Map | December 2020

India Solar Rooftop Map is an infographic report providing a snapshot of rooftop solar market in India - capacity addition across states and consumer ...

Download

India Solar Map | December 2020

India Solar Map 2020 is an infographic report that provides a state-wise break-up of utility scale solar commissioned and pipeline capacity. It also s...

Download

India Solar Compass Q4 2020   

Coronavirus-induced hardships persisted in Q4 2020, pulling installation numbers down. Solar capacity addition in 2020 was at a five-year low. 1,298 M...

Buy Report Download Executive Summary

Smart meters: market update and growth outlook   

With a target to reduce AT&C losses to 15% and improve overall financial performance of DISCOMs, the Indian government is pushing for universal ro...

Buy Report Download Executive Summary

India Solar Compass Q3 2020   

India added just 351 MW of solar power generation capacity in Q2 2020 taking total installed capacity to 38,377 MW by 30 June 2020....

Buy Report Download Executive Summary

Solar Manufacturing Prospects   

Buoyed by government promises of customs duty on imports and financial incentives, solar manufacturing sector is witnessing renewed interest....

Buy Report Download Executive Summary
Award winnig research
We use cookies to offer you an optimal user experience and collect information on website usage.