Slowdown In Indian PV Market Lowers Solar Imports In CY 2019

Mercom India Research: Chinese Market Share in Indian Solar Imports In CY 2019 Dropped To 78% As Total Imports Declined 16%; Indian Exports To Foreign Shores Continue To Surge With 137% Annual Growth
03:29 AM (Beijing Time) - 02. March 2020

For the second consecutive year in a row, solar imports to India dropped, says Mercom, as CY 2019 imports of solar cells and modules added up to $2.17 billion, a decrease of almost 16% over $2.59 billion in 2018, compared to $4.12 billion CY 2017. (Source: Mercom India Research)

Key Takeaways

  • The Indian solar EXIM tracker by Mercom India shows during CY 2019 solar imports to India dropped by around 16% to $2.17 billion thanks to slowdown in installations and effects of safeguard duty
  • China held a market share of 78%, declining by 21% while countries like Vietnam and Thailand increased their presence
  • Exports of Indian manufacturers during the period registered an increase of 137% to $253 million with the US taking 76% of total shipments

A decline in solar power installations and safeguard duty continue to bring down solar imports in India, according to market intelligence firm Mercom India Research that says in calendar year (CY) 2019 India imported solar cells and modules worth $2.17 billion which is a drop of almost 16% over the previous year.

A year earlier, in 2018, India imported solar cells and modules worth $2.59 billion which itself was 37% down from $4.12 billion it imported back in CY 2017.

According to Mercom’s India Solar Export-Import Tracker, China continued to exercise its clear dominance in the Indian PV market – it accounted for 78% of total market share in Indian PV imports during CY 2019, followed by Vietnam, Singapore, Thailand and Hong Kong. Though still gigantic, it is the lowest in the last 2 years –  the Chinese market share was a staggering 91.5% in Q1/2018 and came down to around 80% in Q1/2019 (see India’s Solar Imports Decline, Exports Increase In Q1).

Instead, now Indian solar companies seem to be diversifying their supply sources to countries like Vietnam and Thailand whose annual imports to India increased by 217% and 267%, respectively. At the same time, Chinese imports to the country came down by 21%, while that of Taiwan declined by 81% and Malaysia’s by 79%.

Exports in CY 2019

On the other hand, exports went up by 137% and added up to $253.01 million in CY 2019 with US being the largest market accounting for 76% of total market share contributing to $192 million to the total. Vietnam added $21 million and Belgium $7 million, among others. 

Import Export in Q4/2019

On a quarterly basis, in Q4/2019, Indian solar imports went down by 12% sequentially, and grew by 12% year-on-year. Exports during this period went up 74% on QoQ basis and by 732% YoY. During that quarter, China had a 85% market share among Indian imports.

Another duty in the offing?

Despite the weakening of the Indian solar market in 2019 with the impact of the safeguard duty that’s supposed to end on July 31, 2020, the Indian Ministry of New and Renewable Energy (MNRE) has been advocating imposing a Basic Customs Duty (BCD) on imported solar cells and modules. While there is no clarity as to when this proposed duty will be implemented, according to Mercom this has created new uncertainty in the industry that’s already struggling with multiple challenges and coming off a weak 2019.

Here’s some background on BCD:

In September 2019, MNRE recommended the Finance Ministry to impose a Basic Customs Duty (BCD) on imported solar cells and modules to discourage use of imported cells and modules in solar installations, with effect from April 1, 2021 at 10% initially, increasing it in a phased manner to eventually 30% from January 1, 2023 onwards.   

Following this, the Finance Ministry in its annual budget for FY 2020-21 said there will be no BCD on imported solar cells and modules which was interpreted differently by the industry and led to confusion. Later, MNRE clarified that tariff item 85414011 has been split into two tariff items specified as solar cells not assembled, and solar cells assembled in modules or made up into panels – and that the tariff rate on these items has been increased from nil to 20%. However, the BCD on the same remains nil so far.

In a new notification issued on February 12, 2020, MNRE has asked solar PV manufacturers and associations in the country to provide a ‘loss of machinery/capital goods required for manufacturing of goods’ falling under Tariff Head 8541 to be included in BCD exemption list. In other words, goods required by manufacturers to set up their manufacturing units for PV modules, cells, wafers, ingots and polysilicon will be exempted from BCD.

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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Anu Bhambhani