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.

Back

Recent reports

India Renewable Power CEO Survey | 2020

The survey provides a sector-wide glimpse into the minds of renewable power leaders on industry outlook, capacity addition over the next 5 years, oper...

Download

COVID-19: Impact on Global Solar Market

This report, produced with financial support from International Solar Alliance (ISA), examines operational and financial impact of the COVID-19 pandem...

Download

COVID-19: Impact on Indian Renewables

This report examines operational and financial impact of the COVID-19 pandemic on the Indian renewable power sector. It assesses delays in constructio...

Download

India Solar Compass Q1 2020   

Utility scale solar capacity addition in Q1 2020 was just 689 MW against our estimate of 1,864 MW...

Buy Report Download Executive Summary

India Solar Rooftop Map | December 2019

India’s operational rooftop solar capacity reached 5,440 MW as on 31 December 2019. Only 1,534 MW, 7% lower than last year, capacity is estimated to...

Download

India Solar Map | December 2019

India’s operational utility scale solar capacity reached 30,982 MW on 31 December 2019. Only 7,150 MW of new capacity was added during 2019, up a mo...

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