The case against antidumping duty in Solar.
Mr. AnimeshDamani,Managing Partner, Artha Energy Resources
The Indian Government is expected to introduce an Anti-Dumping Duty (ADD) on solar cells and modules. It is a duty imposed on foreign goods that are being dumped in the country at unfairly low prices.The reason behind this bold step is nothing but the surge of solar exports seen in the market as well as the complaints from local manufacturers about unfair pricing. Currently, it is said that around 89% of solar panels used in India are imported from countries like China, Malaysia and Taiwan. However, the investigation regarding this is already progress.
But, the debate “whether anti-dumping duty (ADD)on solar cells and modules is counterproductive” has been going around in the industry for quite some time. Though ADD seems like an encouraging decision towards the “Make in India” initiative, it is fraught with bottlenecks that are inherently going to come back to bite.
The Hindu Business Line on 5th March 2018 reported that “The Indian Solar Manufacturers’ Association (ISMA) filed a petition for anti-dumping on solar cells and modules to lessen the pressure on domestic industry. It covered an investigation period till June 2017. However, this resulted in a surge of dumping from countries like China, Taiwan and Malaysia at a significantly reduced price. The exports (dumping) from these countries increased from 33% to 45% further hurting the domestic industry.” Thus, it makes ADD a controversial issue among the industry stake holders, manufacturers, EPCs, investors etc.
Figure 1: A graph showing increasing Solar imports to India
There’s no doubt that the domestic industry issuffering from unfair dumping. But, the need for these imports arises due to the poor performance of the domestic industryseen over the years. It makes one question the Government’s decision of ADD and how it is planning to resolve the following bottlenecks:
· Lack of an integrated setup to produce raw materials:
According to the MNRE, the country still lacks the technology to produce raw materials and explore the Solar production capacity to its maximum.
For ex. Polysilicon that is manufactured from Silicon is the key raw material used in the production of a solar cell or solar module. But, India lacks the manufacturing base for polysilicon, ingots, wafers etc.
On one hand, the Union Government seems confident about achieving the target of 100 GW of Solar Power by 2022, while on the other hand, the levy of ADD on raw materials and modules will spike the prices of solar projects. If this target must be achieved, internal bottlenecks need to be resolved. Unless the ministry/ government incorporates new policies and norms, the domestic industry is going to fall short of achieving this target. The Government needs to work towards increasing the manufacturing capacity and the quality of the modules while retaining the price competitiveness.
Thus, to support this initiative, MNRE is focused ondomesticallymanufacturingthe polysilicon used in Solar modules.For this, the proposed policy of MNRE entails direct financial support of more than INR 110 billion (US$1.7 billion), and a few concessions. These concessions include a new quality order for solar cells and modules, development of upstream manufacturing, a capital subsidy for new facilities and upgrades, interest subvention to manufacturers who have taken loans from nationalized banks, exemption from custom duty on capital goods etc. The Ministry has said it would bring in a ‘Technology Upgradation Fund’, borrowing the concept from a scheme of the same name for textile industry. The TUF could be an interest subvention scheme or capital subsidy for technology upgradation projects. The Government also proposes to get Central Government-owned companies to set up 12,000 MW of solar projects using local-made products.
A holistic approach and a well guided action plan are sure to help reduce our country’s need for import of raw materials/ modules from other countries. With the right kind of encouragement from Government, the domestic industry will become self-sufficient and the ADD will serve its purpose of avoiding foreign dump.
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