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Overview of India’s Safeguard Investigation : Recommended 25% Duty

India’s Directorate General of Trade Remedies (DGTR) has recommended imposition of a safeguard duty on imports of“solar cells whether or not assembled in modules or panels” from China and Malaysia, among other developed countries, over a two-year period, starting at 25% in year one. A duty of 20% will be imposed in the first six months in year two, and 15% in the rest of the year.

This recommendation needs to be reviewed by a committee formed by the Department of Energy and Ministry of Commerce and Industry, where decisions will be made on wheter to implement this recommendation or adjust the duty. Once the decisions are taken then they will send it to the Ministry of Finance and needs it’s approval. 
Judging from past experience, whether this recommendation will be implemented remains up in the air since some trade war in the past failed to become law. Further, India still aims to achieve a PV installation of 100GW by 2022, and this has sparked arguments from Indian manufacturers and developers on whether to impose the duty because the domestic demand currently undersupplied.

India is second largest demanding country for PV modules in the world. And it’s account for 13.6% of global PV demand after the “China 531 notification” was released and shrunk the demand in China. Apparantly, India’s policies is highly influential to the global PV industry.

India’s module demand is expected to reach 9 to 11GW this year, and China has been India’s largest module supplier, shipping over 9GW of modules to India in 2017. However, so far this year, China’s module export to India has largely decreased due to concerns about trade war and the slow progress of India’s projects, resulting in only 3.1GW of module shipped to India fron January to May. This is a 33% shrink compared to the same period in 2017, becoming one of a major factor causing an imbalance in the 2018 PV market. 

Currently, India’s local cell capacity is around 2.5GW. The slow progress of projects this year and decreasing imported module prices have stopped local cell makers to expand in capacity. Although Longi has planned to land 1GW of cell and module capacity in India, but other developing countries cannot import modules accounting for over 3%, and cells accounting for 9%, of India’s total imports. This will limit the help from Vietnam and Thiland, which combine for nearly 10GW of cell capacity. Geneally speaking, the goal of meeting the 10GW yearly demand for modules appears unachievable if without China nad Malaysia’s PV cells and modules. 

On another note, India’s advantage in cost and prices still not be clear even with 25% safeguard duty imposed on China, Malaysia, and other developed countries’ cells and modules. Considering the already higher production costs and low yield rate of Indian modules and the extremely imbalanced PV market this year, the costs of Chinese modules will still be lower than thos made in India even after duty. As a result, the safeguard duty can only bring negative impacts to India, such as raising the costs of PV power plants or reducing the efficency of modules.

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