Solar Anti-Dumping Duty in India: Protection is Needed to Build a Bright Future

The Indian solar sector has shown incredible growth trajectory. The industry doubled its solar capacity in the last few years (5 GW in 2015, 10 GW in 2016, and ~16.6 GW in 2017), which is really very inspiring considering the country lacks enhanced industrial infrastructure that China, the US, and other market dominating countries have. India’s aggressive solarization initiative made its intent of phasing out fossil fuels to bring in socio-economic change clear. However, the rise of solar module import year-after-year shows a completely opposite picture than what ‘Indian Solar Vision’ and ‘Make in India’ indicated.

Domestic solar manufacturers in India have highlighted (on multiple occasions) the negative effects of increasing solar import. And appealing against solar imports, while India has grown its solar manufacturing capacity to satisfy the in-country energy demand, can be considered valid. After nearly 5 years of appeals, on December 12, 2017, Office of the Directorate General of Anti-Dumping (DGAD) presiding over the antidumping petition filed by domestic solar manufacturers is seen as a step forward towards growth.

Allowing import of solar modules within India has created an issue within capacity utilization for domestic manufacturers. In such a scenario, re-visiting the recent antidumping issue in the solar industry can bring the results India desperately needs to become solar reliant.

IMPORTING SOLAR MODULES EXTINGUISHES DOMESTIC INDUSTRY POTENTIAL

Foreign solar suppliers have grown their manufacturing capacity with government (foreign) support and financial aid. This has allowed them to mass produce solar components (especially solar modules, as it is the finished product) and export at a much lower rate than the existing market price. Chinese modules used to be 8–10% cheaper than that of domestically manufactured modules. The lowered price and huge availability within the market has encouraged developers of Indian solar projects to go for foreign products.

Huge forex outflows can be identified as the result of importing solar components. India spent $821 mn in FY 2014/15, $2.3 bn in FY 2015/16, and $3.2 bn in FY2016/17 in solar equipment imports, which is about 35 times its solar equipment export. Indian solar industry has capability to create jobs, improve upon industrial infrastructure, bringing in socio-economic growth (since energy and economy are interrelated). Such growth and development can be facilitated through protecting domestic manufacturing capacities (just like China and the US) and not by importing.

Uncontrolled increase of module imports and lack of quality control have led to rise of low quality module usage on domestic projects, which threatens the energy security. Import of solar modules also brought consistent fall of solar tariff, which started to curb investor interest and scaring them away. Too much importing has also blocked the path of technological innovation (if a country concentrates on importing low-priced products, there will be little chance of in-country technology growth), and has allowed more than 80% domestic market share to foreign suppliers.

Indian solar industry has supported the initiative to impose anti-dumping duties on foreign solar suppliers. However, higher anti-dumping duties should be levied on solar modules, as they are the finished products.

WHY HIGHER ANTIDUMPING DUTIES SHOULD BE LEVIED ON IMPORTED MODULES THAN CELLS?

If we were to compare between solar cells and solar modules, we would know that solar modules cost way more in the market as they are the finished products. Therefore, it is easy to translate that levying higher antidumping duties on solar modules would help Indian solar sector to reduce forex outflow considerably and open up more opportunities for profit through exports.

It is also important to note that India’s current solar cell capacity of 3.1 GW is not capable of satisfying immensely growing (current 8.4 GW) solar module capacity. Therefore, it is important for Indian solar sector to continue to receive imported solar cells at a feasible price. Imposing higher or similar anti-dumping duties on cells as on solar modules would make the module manufacturing cost high, thus making the industry uncompetitive.

So, although imposing anti-dumping on imported solar modules is extremely necessary for the domestic industry to survive, duties on imported solar cells should be lower, until the country can satisfy existing and growing module manufacturing demand with domestic cell capacity.

India’s dream of improving industrial, social, and economic infrastructure through solar adoption can only become reality through focus on domestic solar manufacturing. It has the potential of making India the third largest economy in the world, and the opportunity should be realized for success in solar revolution.

Mr Karunesh Chaturvedi, Head, Corporate Affairs, Vikram Solar.