Can safeguard duty imposition really help in developing our local manufacturing capacity ?

China’s imports have come recently into the spotlight because of the Indo Chinese geopolitics and conflict on the Doklam Valley. While Indian government has already imposed safeguard duty of the order of 20% on solar PV modules and cells. Be safeguard duties ending by end of July 2020 and as per recent government order, it is unlikely that we safeguard duty is withdrawn government has reinstated the Sagar duty on TV models and sales from China Malaysia beyond July 20 20 as well.

The imposition of safeguard duty and the recently initiated basic custom duty on Chinese PV modules and cells is largely from the point of view to protect Indian manufacturers who are not able to compete with low-cost Chinese cells and modules

China’s exports here in Indian PV market account for about 60% of installations and the imposition of safeguard duty and basic customs duty is not able to protect the inflow of Chinese PV modules and cells in the Indian market. Even after the imposition of basic custom duty and safeguard duty Indian manufacturers are finding it difficult to compete with Chinese modules in terms of cost as well as quality. It is not that the Indian government only imposed the trade tariffs on the Chinese PV module is but European Union as well as the Trump administration in the US have also imposed trade tariffs on Chinese PV modules to protect their respective manufacturers in countries.

If the Indian Government really wants to develop its manufacturing capability needs to develop increasing domestic installations with Indian models and come up with more and more domestic module manufacturer linked PV projects in Indian market so that the manufacturing capability off Indian manufacturers can be fully utilized. Though in recent tenders of SECI they have come up with Manufacturer linked domestic installations but this proportion is hardly 10% of the total installations taking place currently in the Indian market.

The outcome of imposition of these duties it is such that the Indian annual capacity addition has reduced from about 9.5 GW to about 6.5 GW in 2019. It is equally important to note that solar module manufacturing has become a highly automated industry and does not imply significant manpower druther the manpower deployment in solar industry is more during the construction and operation and maintenance of solar projects which adds significant jobs as direct and indirect jobs to the rural economy. The Indian solar manufacturers will have short-term relief in competing with Chinese cost modules over it is important that the Indian manufacturers focus not only on Indian market but should also be able to compete in the international market with the other suppliers. Imposition of these duties and taxes on the import of PV modules will also reduce our annual capacity addition and will hamper our targets of 175 GW by 2022.