India levies 25% safeguard duty on import of solar cells

New Delhi, August 1: With the aim of protecting the domestic solar industry, India imposed a safeguard duty on solar cell imports for a year till July 29, 2019. This imposed safeguard duty accounts to 25% on the imports of solar cells.

 

According to the notification, the safeguard duty will not be imposed on imports from developing countries, except China and Malaysia. The federal trade ministry earlier this month recommended imposing a 25% duty on imports of solar cells and modules from China for one year to try to counter what it sees as a threat to domestic solar equipment manufacturing.

India imports over 90% of its solar equipment from China. The safeguard duty on imports would be applicable for two years. It would be reduced in the second year to 20% for six months and would be charged at 15% for the next six months.

With the initiative of Make in India, India has about half-a-dozen makers of solar cells and modules, with a total capacity of around 3,000 MW. This is hardly enough to meet the country’s growing demand.

It has been noted that India will auction close to 25 GW to 30 GW a year. Domestic manufacturers are not in a position to manufacture over 3 GW or 4 GW. Going forward, at least 80% will be imported.

While the move is aimed at helping the domestic solar cell manufacturing sector, it could affect existing projects dependent on cheap imports. While the safeguard duty now puts locally-made panels on par with imported ones in terms of cost, the domestic sector needs to do a lot more to be effective.