Finally a 25% Safeguard Duty in India?

India finally considers slapping a 25% safeguard duty on imports of solar cells and panels from China and Malaysia. The US, the UK, and Taiwan will currently be exempted from these duties. The ministry is planning to reduce these duties in a phased manner over the years – 25% duty in the first year, 20% for the first six months of the second year, and 15% for the next six months.

The dilemma of the imposition of these duties has been hanging for quite some time now. India is flooded with increasing imports from the neighboring countries which have led to a poor state for the domestic manufacturers. While the Indian Solar Manufacturers Association, consisting of a group of leading Indian solar manufacturers proposed a 70% duty imposition, a 25% duty should be fair enough. However, prices of a solar system are poised to increase to more than INR 3 per unit from prevailing INR 2.5 per unit levels today, after duty imposition. The price of rooftop solar is further expected to increase to nearly INR 4 per unit.

The growth of rooftop solar has been anemic in India, we hope this duty does not dampen the situation more. Given the scarcity and cost of land in India, rooftop solar seemed to be a viable option for solar in India. However, lack of awareness amongst people has led to a poor response. Did you know the value of a home actually increases with a solar system installed, in mature solar markets like California and people are willing to pay $15,000-$20,000 more for a home equipped with a rooftop solar system? Though India is far from reaching that state right now, it is making decent progress on the rooftop front. India installed more rooftop solar last year as compared to other previous years.

India wants to impose duties in order to protect its domestic manufacturing, but developers feel that as much as 6,000 MW of current ongoing solar projects might become non-viable after the duty imposition. India has close to 1,400 MW and 2,500 MW in solar cell and module capacities, respectively. However, more than 80% of this capacity is idle because of lack of demand for domestically manufactured components. Availability of cheap imported components has led to a declining purchase from domestic manufacturers. Solar cell imports have increased five folds, to more than $3,800 billion in 2017-18 from just $700 billion five years ago. Given the lack of demand in the Chinese market, it was expected that all the Chinese made solar products would be further directed towards India, reducing the price even more. I think it is a good move by the government to consider a 25%  duty, given that solar technology is now mature enough and there is a huge demand in India.

Also, check out our List of Top Rooftop Solar Panels to buy in India