India Contemplating 70% Safeguard Duty

India’s Directorate General Of Safeguards, Customs And Central Excise Recommends Imposition Of 70% Safeguard Duty On Solar Cells Imported From China & Malaysia
08:47 AM (Beijing Time) - 10. January 2018

Key Takeaways

  • A 70% safeguard duty could be imposed on imported solar cells coming from Malaysia and China
  • The Directorate General of Safeguards, Customs and Central Excise has recommended the duty be imposed for a period of 200 days
  • Companies operating in special economic zones (SEZ), treated as foreign manufacturers, may come into the ambit; three of the petitioners for imposition of safeguard duties operate out of SEZ
  • Tariff recommendation is indicative and is only a preliminary finding, says the government agency

India’s Directorate General of Safeguards, Customs and Central Excise has recommended a 70% safeguard duty on solar cells imported from China and Malaysia for a period of 200 days. This recommendation is a preliminary finding based on the data submitted by a domestic manufacturer and would be subject to further scrutiny.

Late last year, the Indian Solar Manufacturers Association (ISMA) had filed a petition seeking imposition of safeguard duties on imported solar cells from China, Malaysia, Singapore and Taiwan (see ISMA Calls For Safeguard Duty On Imported Cells).

The government agency has further suggested that the tariff recommendation is indicative and that the description of the imported goods will determine the applicability of the recommended safeguard duty.

In India, companies operating out of a special economic zone (SEZ) are treated ‘on par’ with foreign manufacturers. As a result, any safeguard duty may bring these domestic companies into the scope – something about which the industry is understandably wary.

The All India Solar Industries Association (AISIA) had already released a statement strongly opposing any blanket safeguard duty on the import of solar cells and panels. It will “badly impact solar manufacturers’ operation out of the special economic zones (SEZ) across the country,” it stated.

Interestingly, out of the five applicants for the imposition of safeguard duty, three are based in SEZs. These are Mundra Solar PV Ltd., Websol Energy Systems Ltd. and Helios Photo Voltaic Ltd.

While AISIA does support specific anti-dumping duty on imports from China (see Anti-Dumping Investigation Begins In India), it has recommended imposition of “differential anti-dumping duties.”

It should be noted,” said AISIA General Secretary Gyanesh Chaudhary, “that out of 8.3 GW of solar module manufacturing facilities, 3.8 GW are situated in SEZs.” He states that indigenous manufacturers situated in SEZ will therefore come under the ambit of any blanket duties, making them uncompetitive. Chaudhary is also the CEO of Indian PV module maker Vikram Solar

Foreign manufacturers are clearly not happy about any of the investigations, even those who plan to invest in India. Vertically integrated module maker LONGi Solar from China is currently building a 500 MW cell and module factory in India. However, the company’s Indian management feels anti-dumping duty on solar cells and modules from China, Malaysia and Taiwan may only be good for the Indian industry in the short term, but in the long term it may be detrimental. Rahul Kapil, the head of LONGi Solar in India, told Mercom Capital, “Most domestic manufacturers currently run on old technology and are not ready to move on.” LONGi Solar says it had decided to invest in India before the recent anti-dumping investigation started. It signed a memorandum of understanding (MoU) with the Andhra Pradesh government to set up factories in the state already in 2015.

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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Anu Bhambhani