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India mulls 70 per cent safegaurd duty on solar equipment imports

To protect the interests of the domestic industry and responding to the application filed by an association of five domestic cell and module makers including Adani Group, the Directorate General of Safeguards has recommended to the Finance Ministry to impose “ a provisional Safeguard Duty at the rate of 70 percent ad valorem on the imports of solar cells whether or not assembled in modules or panels” for a period of 200 days “"which is considered to be the minimum period of time required to protect the interests of the domestic industry."

India has annual manufacturing capacity for solar cells of around 3 gigawatts as against requirement of 20 GW.

DGS said import of solar equipment jumped from 1,271 MW in 2014-15 to 4,186 MW in the next year and to 6,375 MW in 2016-17.

Current fiscal imports are pegged at 9,474 MW as compared to domestic production of 1,164 MW.

"The growth rate of such imports as a percentage of the domestic production was a remarkable 1,371 per cent 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.

Reasoning its decision, it said while China's exports to India constituted a paltry 1.52 per cent 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 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 per cent while its exports to EU and USA fell to 15.12 per cent.

Again, in the first half of 2017, China's exports to India increased to a staggering 38.77 per cent of its total exports while its exports to EU and the US shrunk to just 5 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 countries / markets like EU and USA etc could not have been foreseen," DGS said.

The five domestic manufacturers who had sought imposition of safeguard duty included Adani-backed Mundra Solar PV Ltd, Indosolar Ltd, Jupiter Solar Power Ltd, Websol Energy Systems Ltd and Helios Photo Voltaic Ltd

Before final duties or import taxes are levied, DGS will hold further investigation into the injury caused by cheap imports. It would also hold a public hearing on the issue.

 


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