Imposition of an ADD will severely compromise the development of India’s solar energy sector as about 80 per cent of the country’s module requirement is met through imports, mostly from China.
‘Dharnai – Saur Gram’ – the small hamlet in Bihar’s Jehanabad district is indeed a study in progress. For nearly 70 years after independence, the village had remained powerless – figuratively as well as literally. It catapulted into fame about two years ago as India’s first fully solar-powered village. The thatched roofs and meandering roads of the village have been dotted with solar panels since. Whether Dharnai will continue to shine bright or descend into darkness once again depends to a large extent on the government’s decision regarding implementation of Anti Dumping Duty (ADD) on imported solar panels. The decision is also likely to have wide ramifications on the 5,000-odd villages and 240 million people in India that are still bereft of access to electricity.
Today, the demand for energy security is more urgent than ever before. Research has shown that access to affordable and quality power is closely related to development, especially in the rural milieu. It leads to increased productivity in agriculture, rising employment and entrepreneurship opportunities, improvement in children’s education; delivery of health services; public safety through lighting; access to means of communication such radio, television, mobile, etc. The benefits of energy security are wide-ranging.
Solar is the best bet for those at the bottom of the energy pyramid. This is the reason why it holds a whopping 100 GW share in India’s 175 GW renewable power target, set to be achieved by 2022. The government is looking at generating 40,000 MW through rooftop solar projects and 60,000 MW of on-ground solar projects. Solar energy is environmentally, and financially sustainable; one with potential for scalability. Solar energy is a proven catalyst for change as it not only addresses the issue of poverty but also climate change.
The solar industry in India has had an enviable report card. India’s solar power capacity astronomically ascended from 2,621 MW to 12,277 MW in the last three years – a commendable 370 per cent expansion. A Bolt-esque fairy tale finish seems to be in order provided the ADD hurdle is not pushed on the track. With a current installed solar capacity of arund 13 GW, a lot of ground still remains to be covered. Imposition of an ADD will severely compromise the development of India’s solar energy sector as about 80 per cent of the country’s module requirement is met through imports, mostly from China. Such an imposition will prompt China to increase the cost of Silicon wafers, the main input for solar cell manufacturing, leading to an increase in the module prices.
It will further result in higher solar power tariffs – from the current range of Rs 2.50-3.00 per unit to Rs 3.50-4.00 per unit – that will deter electricity distribution companies and shrink the overall size of the solar market.
Manufacturing solar cells and panels at home isn’t exactly a viable option given that a subsidy of nearly Rs 1.75 crore per MW is being provided by the government to help the domestic manufacturers remain competitive in the solar power market in terms of tariff. ADD will also create an environment of hesitation and apprehension amongst investors who would otherwise be willing to invest in India’s solar energy sector.
Any apprehensions there might be regarding the quality of solar cells and modules being imported into India, have been addressed by the notification of the Solar Photovoltaics, Systems, Devices and Components, Goods (Requirements for Compulsory Registration) Order 2017, which mandates all imports of solar equipment to be in conformity with the Standards specified by BIS. Additionally, the government can consider introducing a Minimum Import Price (MIP) to ensure that only quality solar panels and modules are imported into India. Such a move will protect Indian solar developers and will also help the solar manufacturing industry to flourish while remaining competitive.
The government needs to adopt an ear-to-the-ground approach. India gets about 300 days of sunshine a year which makes solar energy a feasible, easy to install, pollution-free alternative to replace non-renewable energy. Solar is the only hope for the forlorn hamlets that have either remained shrouded in darkness till date or have been subject to erratic power supply because setting up conventional power grids in remote locations remains a complex and expensive proposition.
A chain is only as strong as its weakest link. ADD is the link that needs to be avoided for India to meet its 100 GW target by 2022.
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About Ameeta V Duggal
Ameeta Verma Duggal is the founder partner of DGS Associates, a New Delhi-based law firm that offers legal services to corporates in the areas of trade, solar energy, civil aviation, real estate, telecom, intellectual property rights, litigation and arbitration. Ameeta heads the Trade Laws Practice of the firm, including anti-dumping, safeguards and foreign trade issues.