India imposes 25 percent safeguard duty on solar cells and modules

The Ministry of Finance has imposed a 25% safeguard duty on imports of solar cells and modules from China and Malaysia. According to solar Industry experts this will certainly raise tariffs of future solar projects.

More than 90% of the solar panels and modules are imported from both the countries for solar projects in the country.

DGTR recommended the imposition of 25% safeguard duty on solar cells and modules imported from these two countries for a year, followed by 20% for the next six months and 15% for another six months.

DGTR’s recommendation was based on the fact that such imports were causing “serious injury” to domestic solar manufacturers. The duty comes into effect from July 30.

DGTR conducted its own probe responding to a complaint from the Indian Solar Manufacturers Association (ISMA). Solar developers in the country have been supporting Chinese and Malaysian solar equipment as it is cheaper than the one manufactured in India.

Developers and EPC players have been strongly opposing imposition of safeguard duty on the grounds that it would raise tariffs, as they would have no option but to pass on the extra charge to discoms and ultimately consumers. Industry experts says that the imposition may slow down India’s ambitious solar programme which aims to have 100,000 MW of solar capacity by 2022, citing that local manufacturers do not have sufficient capacity to meet their needs.

India faced criticism from European Union and Japan, in April this year it told a WTO committee that the country followed global trade rules while imposing safeguard measures on imported solar cells. The issue came up at the meeting of the safeguard committee of the World Trade Organization (WTO) in Geneva on April 23.

India stated that it has followed “WTO rules and regulations on the imposition of safeguard measures”. Under the WTO norms, a member country can impose safeguard duty to restrict imports of a product temporarily with an aim to protect domestic industry from an increase in imports of any product which is causing or threatening to cause, serious injury to the industry.

In the meeting, the EU has stated that safeguard measures should only be imposed under exceptional circumstances, particularly if the imports causing problems come from predominantly one source.

WATCH: What Industry Experts says on Safeguard Duty