India’s Directorate General of Safeguards (DGS) has asked the government to levy an emergency duty, at the rate of 70% ad valorem, on the import of solar power equipment from countries like China, for 200 days, to protect the domestic industry from “serious injury”.
The DGS, in a January 5 recommendation to the Finance Ministry, said solar cells are “being imported into India in such increased quantities and under such conditions so as to cause or threaten to cause serious injury to the domestic industry manufacturing like or directly competitive products.” The existing “critical circumstances” justify the immediate imposition of a provisional safeguard duty to save local units from further serious injury, which would be difficult to repair in case the safeguard measure is delayed, it said. The safeguard duty will be levied if the Ministry accepts the recommendations of the DGS, which is acting on an application filed by an association of five domestic solar cell and module manufacturers, including the Adani Group. Before final duties or import taxes are levied, the DGS will hold further investigation into the injury caused by cheap imports. It would also hold a public hearing on the issue. India’s annual manufacturing capacity for solar cells stands at around 3GW as against a requirement of 20GW. DGS said the import of solar equipment jumped from 1,271MW in 2014-15 to 4,186MW in the next year and to 6,375 MW in 2016-17. Current fiscal imports are pegged at 9,474 MW as compared to a domestic production of 1,164 MW.
“The growth rate of such imports as a percentage of the domestic production was a remarkable 1,371% during the intervening year 2015-16. “Even the overall growth rate of the imports relative to its domestic production is very significant, rising from 519 per cent in 2014-15 to 814 per cent in 2017-18,” it said. Justifying its decision, it said while China’s exports to India constituted a paltry 1.52% of its total global exports during 2012, this increased to 21.58 per cent during 2016. During the first half of 2016, Chinese exports to India were 18.51 per cent of its total exports while the combined exports to the EU and the US were 30.65 per cent of its total exports. The situation turned dramatically during the succeeding two half yearly periods. In the second half of 2016, China’s exports to India constituted 25.09% while its exports to the EU and the US fell to 15.12%. Again, in the first half of 2017, China’s exports to India increased to a staggering 38.77% of its total exports while its exports to the EU and the US shrunk to just five per cent (of its total exports), it said. “Such a significant shift in pattern of trade in which China started targeting the Indian market more vigorously as compared to developed markets like the EU, the USA etc could not have been foreseen,” the DGS said. The five firms that sought imposition of the emergency duty are the Adani-backed Mundra Solar PV Ltd, Indosolar Ltd, Jupiter Solar Power Ltd, Websol Energy Systems Ltd and Helios Photo Voltaic Ltd, reports the PTI.