India launches probe against China over solar cell import

The commerce ministry of India has initiated an anti-dumping investigation against the import of solar cells from three countries including China. The other countries are Thailand and Vietnam. The investigation was triggered by an application by the Indian Solar Manufacturers Association (ISMA).

Solar cells are the basic ingredient used in the manufacturing of solar modules and Chinese products are 15-20% cheaper than their Indian counterparts.

The notice issued by the directorate general of trade remedies said that prima facie evidence of dumping was found against the aforementioned product of the above countries_ leading to injury to the domestic industry. Low module prices have played a major role in bringing solar tariffs down to the current low of Rs 1.99/unit_ but it has kept the domestic solar sector relied on imports and local manufacturers have found it difficult to sell their products.

A similar anti-dumping investigation against the import of solar cells from China_ Taiwan and Malaysia was initiated by the government in July_ 2017 but was eventually called off in March_ 2018 on ISMA s request.

To boost domestic manufacturing_ the Centre had imposed a 25% safeguard duty on solar imports from China and Malaysia in July 2018 for two years_ which was extended to July 2021_ at a rate of 15%.

After the safeguard duty imposition on China and Malaysia_ solar imports had since surged from Vietnam and Thailand. Between FY18 and FY20_ imports of solar cells and modules from Vietnam and Thailand recorded a growth rate of 800% and 5_750%_ to $136 million and $117 million_ respectively. Import of Chinese products have fallen 60% to $1.3 billion in the same period.

Overall solar imports have come down by 72% annually in April-February FY21 to $468.5 million due to the Covid-19 restrictions_ as the pace of solar capacity addition also dwindled to 5 giga-watt (GW) in the same period_ down by about 45% annually.

From the beginning of FY23_ solar module and cell imports will attract a basic customs duty (BCD) of 40% and 25%_ respectively. However_ procurement of these items from China is seen to surge significantly in the last three quarters of FY22 as there will be no import barriers in place after the safeguard duty regime ends in July. The government has introduced the Rs 4_500-crore production-linked incentive scheme for solar module manufacturing_ which analysts at India Ratings said_ will push the sales of 20 GW of domestic product from the output capacity developed under the five-year programme.

As on date_ the domestic cell manufacturing capacity in India is around 3 GW and module making capacity is 10 GW.