Safeguard duty: Import of solar cell declines, domestic firms’ market shares up
The government, in July, imposed a 25% safeguard duty on import of solar cells for a year ending July 29, 2019 from China, Malaysia and other developed countries.
The imposition of safeguard duty on the import of solar cells — the basic ingredient needed to manufacture solar panels — is starting to show its effect. In the first six months of FY19, the country imported solar cells worth $1,038 million, 47% lower than what was imported in the corresponding period a year ago.
This is a reversal of the trend that prevailed in the last three years, where value of solar imports increased at a compound annual growth rate of 91.4%. About 88% of domestic module requirements were met through imports in FY18.
The government, in July, imposed a 25% safeguard duty on import of solar cells for a year ending July 29, 2019 from China, Malaysia and other developed countries. The duty would be 20% for the next six months, till January 29, 2020, and 15% in the subsequent six months.
India has an ambitious target to increase its solar capacity to 100 giga watt by 2022 from 24 giga watt at present.
Meanwhile, the market shares of domestic solar panel makers are on the rise. According to data from Bridge to India, no Indian module supplier featured among the top ten module suppliers as on September, 2017. Cut to September, 2018, Adani Solar and Tata Power Solar find a place in that list in the renewable research agency’s latest report. The market share of Vikram Solar and Waaree Energies now stand at 3.3% and 1.1% respectively.
Some feel that the drop in solar import is actually a result of the slowdown in solar capacity addition due to the reduced enthusiasm and participation of the industry due to several uncertainties. In the first six months of FY19, 2,370 MW of solar projects was added, 5% lower than the capacity addition in H1, FY18.
Amit Gupta, legal and business affairs head, Vikram Solar said, “Solar developers are uncertain if they will be able to get the reimbursement on account of safeguard duty and/or how much time will be spent in getting the same recovered through legal process.”
Since imported solar equipment is usually 8-10% cheaper than those made in India and modules comprise about 60% of total project costs, solar developers had pointed out that the new duty might jeopardise the viability of solar projects.
CARE Ratings, in an earlier note, had said that the safeguard duty might increase solar tariffs by as much as 50 paise per unit. Currently, the lowest solar tariff stands at Rs 2.44/unit.