What led to Safeguard Duties in India's Solar Industry – Explained through Illustrious Tables

Numbers that Led to Safeguard Duty in India

We at Greenworldinvestor, have been quite vocal about Safeguard duties in India. The ministry recently stayed the imposition with just a few weeks of passing a 25% duty imposition on India’s neighboring countries like China, Malaysia and Taiwan. There has been a lot of ongoing debate about this topic since the last one year. First, the ministry itself proposes a duty on a recommendation by the ISMA but later says that it wasn’t needed (given huge industry cries over price increase after duty imposition). It again imposes the duty in July 2018 only to put a stay on it once again.

As an ordinary person with interest in solar, the situation has been quite confusing. So I dig deeper to find out the numbers which have been presented in simple tabular forms for easy understanding.

After India’s allegiance to the Paris Climate change, the country vowed to reduce its carbon footprint and as a result, committed to increasing its solar base in India. There were several factors that led to a surge of Chinese imports into India:

i) other countries taxing China’s solar imports in their regions

ii) lack of adequate advanced technological manufacturing capacities in India

iii) WTO nullifying the domestic content requirement in India

iv) falling import prices in India

In contrast, check out the Indian production numbers:

In the meanwhile, China’s production capacity also leapfrogged:

China’s export to India also increased

On the other hand, exports to other leading countries like the US and Europe continued to decline.

Note how the percentage of Chinese exports to India alone closes to that in Europe and the USA in 2016. This happened as a result of India’s grander plans to expand its renewable energy base and the USA and EU imposing solar tariffs on Chinese imports. With India’s ambitious solar targets, lack of sophisticated indigenous materials and falling import prices, India’s imports paced up. Here look at the fall in the prices of imports over the years.

There was a 28% fall in cell prices and more than 37% decline in panel prices. In order to encourage domestic production and safeguard the Indian industry, the government imposed duties on solar imports into India. However, the move was protested by Indian solar developers who threatened to cancel their ongoing projects as a result of an increase in project tariff. Here it is important to note that India already has one of the lowest tariffs in the world. a duty of a small magnitude is imperative to save the large domestic manufacturing industry.