Indian Solar Manufacturers Ready for A Sunbath after 25% Duty Imposition

25% Safeguard Duty in India

So finally, after a lot of deliberation, India has imposed a 25% safeguard duty on solar imports from neighboring countries like China and Malaysia. We at Greenworldinvestor have already discussed the beneficiaries and the pros and cons of the duty imposition. While we understand the overall project cost will go up due to this duty imposition, the industry should also take into account that the prices have rapidly fallen in the recent years. India has one of the lowest solar cost structures in the world with prices further expected to fall. Solar is rapidly becoming mainstream in many parts of the world are finding increased applications especially in places without grid connection.

The safeguard duty of 25% on PV modules and cells has come into force from July 30, 2018. The magnitude of the duty will gradually decrease over a period of time – 25% for the first year, 20% for the next six months thereafter and 15% for another six months.

There has been a large industry debate on the topic of duty imposition on solar imports. Given the rising import levels, the country had to take a step to protect its domestic manufacturing. For instance, Trina Solar was the biggest suppliers of modules to India in 2017, with imports rising to more than 1 GW. The biggest beneficiaries of this duty imposition are the solar cell and panel manufacturing companies. However, one of the major setbacks of this duty is an almost 15% hike in solar project costs, which the industry fears will hamper the fast-paced development in India. No relief has been provided to the existing solar projects or units located in SEZs.

The solar industry is gradually maturing in India. With project cost being one of the lowest in the world, will India stride successfully through this duty? Well, only time can tell. Developers need to take a leap of faith and keep going, only then can the manufacturing industry mature and be competitive at a global level. Now is the time for the manufacturers to shine in India.