MUMBAI: The solar power industry is divided over imposition of anti- dumping duty.
While Indian manufacturers of solar panels have backed the imposition of a duty on imports of cheap solar inputs from China, Malaysia and Taiwan, power developers have opposed it on grounds that it will come in the way of declining tariffs.
The latest solar auctions’ bids had one important assumption – that the cost of solar modules should fall by another 10-15 per cent (after it dropped by 30 per cent in the last one year).
Considering the solar modules account for 50-60 per cent of a solar PV project cost, the anti-dumping duty on imported solar inputs lobbied by domestic manufacturers raises many concerns, according to the developers
In June, Indian Solar Manufacturer’s Association (ISMA) had approached the Directorate General of Anti-Dumping (DGAD), requesting an imposition of a duty on importers of cheap solar inputs.
DGAD has initiated the discussion with the industry and the first outcomes, according to the market players, are expected by end of this month, although the entire process could take up to a year.
This is not the first time that Indian manufacturers are taking the anti-dumping duty route to compete against cheaper imports which account for around 80 per cent of the market. The first attempts were made in 2012 and 2014 – but despite DGAD’s suggestions, the Ministry of Finance did not impose the duty then.
Dhruv Sharma, CEO, Jupiter Solar Power Ltd, a Kolkata-based manufacturer and a part of ISMA, said the country’s ambitious solar power generation targets had assured a market providing an opportunity to develop an ecosystem for solar manufacturing in India across the value chain.
“With anti-dumping duty which creates a demand visibility for a period of up to five years, we are sure that there would be significant investments made in manufacturing capacities in India,” he told BusinessLine.
The existing manufacturers will be able to double their capacities in 15 to 20 months, he added, while major Chinese solar manufacturers, who export to India, would make manufacturing investments in India in order to retain and grow their market shares.
The industry expects the duty in the range $0.10-0.15 that would increase the solar tariffs by 60 -80 paise. If this happens, the lowest existing tariff of ₹2.44 per unit will go up to ₹3.30.
“At this price Discoms are not likely to buy solar power from solar PE power plants as it is not as competitive against thermal power any more,” an industry player who wished to speak on conditions of anonymity said.
On the other hand ISMA feels that the duty will at the most increase the tariff by ₹0.30 to ₹0.40 per unit. “There is enough head room to absorb such an increase and more,” says Sharma.
According to Sanjay Aggarwal, Managing Director at Fortum India, the duty may not have any impact as Chinese manufacturers will still be able to sell their products to India because India’s own manufacturing capacity will not able to meet the demand of developers.
“If the solar tariff goes up, the higher price for electricity will be eventually paid by the consumer,” he told BusinessLine. “If the initial idea of renewable capacity addition is that the consumer should pay less for power… that gets lost somewhere”.
What worries developers, Aggarwal said, is that all the on-going project that have been already awarded and those projects that are going to be bid for in next several months – before any official notification on anti-dumping duty comes from the government – should be exempted from anti-dumping duty as the bids placed by the developers when the duty was not in place.