Implications of Duty Imposition On Solar Panel Imports in India

India is aggressively marching towards its 2022 target of 100 GW of solar installation. It had cumulatively installed 20 GW of solar by the last year itself. As India plans to impose duties on solar imports, developers are in a skeptical position and are not actively participating in solar auctions.

Recently, a 1000 MW auction by Maharashtra State Electricity Distribution Co Ltd (MSEDCL) and a 1200 MW auction by Karnataka Renewable Energy Development Ltd (KREDL) were postponed. Developers are afraid because the tender documents do not contain any provision of “change in law” clause, which could also involve a tariff change. Many solar firms are thus staying away from solar auctions because there is an uncertainty around imposition of safeguard and anti-dumping duties.

The Directorate General of Safeguards, Customs and Central Excise have found a preliminary case of imposing a 70% safeguard duty on the import of solar panels into India. The quantum of the duty is much higher than what would have been dreamed by the petitioners who belong to ISMA. For the last one year, the Indian domestic manufacturers who own a combined 8 GW of solar panel and around 3 GW of solar cell capacity have found themselves in a sticky situation.

The state of solar manufacturing is sad in India and nearly 90% of modules used in Indian solar projects are imported. The imported panels and solar equipment are nearly 30% cheaper than locally manufactured ones. China, Malaysia, and Taiwan are the chief countries importing solar products into India. An imposition of duties on imported solar products could severely dampen the solar progress that India has witnessed. Though the government aims to protect the interest of Indian manufacturers and encourage Make in India, the uncertainty around its policies has slowed down activities. The country needs sound and clear policies to bolster growth. What the government needs is to formulate policies that could help retain the price competitiveness of solar power in India.

India is on the cusp of reaching its solar potential. Its recent 20 GW mark of solar installations and active participation in the ISA summit are the proof of its commitment towards solar. It is important for the government to come up with policies that will balance its Make in India initiative as well as maintain the competitiveness of solar prices in India. The country has come so far in its solar journey that it will be foolish on the part of the government to now destroy what India has achieved.