India Recommends 25% Safeguard Duty

• India's Ministry of Commerce and Industry's DGTR has recommended 25% safeguard duty for the first year on imported solar cells from China and Malaysia
• Over the course of next year, the duty would come down to 20% for first 6 months, and then to 15% for the next 6 months
• The investigating agency found merit in the argument by petitioners that such imports have caused and continue to cause serious injury to domestic producers
• These levels, it argues, are enough to protect domestic industry that holds strong potential for solid manufacturing base in the country

The haze around the uncertainty regarding safeguard duty implementation in India is getting somewhat clear. The Directorate General of Trade Remedies (DGTR) has recommended levying 25% safeguard duty on imported solar cells from China and Malaysia for the first year.

During the second year of its implementation, the duty would come down to 20% for the first 6 months, and drop further down to 15% for the next 6 months.  Previously, the Directorate General of Safeguards, Customs and Central Excise had recommended imposing 70% safeguard duty (see India Contemplating 70% Safeguard Duty).

DGTR, during the course of investigation, determined that increased imports of product under consideration (PUC) in India has caused serious injury and threatens to cause serious injury to domestic producers. It suggest to impose safeguard duty on such imports. The levels suggested are considered to be 'adequate to protect the interest of domestic industry on PUC being imported'.

Only products imported from China and Malaysia would be penalized. It would not be imposed on products from other developing nations' products from where do not exceed 3% individually and 9% collectively.

DGTR believes imposition of safeguard duty are in public interest as it would prevent the complete erosion of the Indian solar industry's manufacturing base, which holds promise for expansion in the future.

DGTR's detailed recommendations are available on its website.

In a similar context, in January the US imposed a 30% safeguard duty on imported cells and modules for the first year, though from any country. Every subsequent year, the tariffs will reduce by 5% over the course of four years (see Trump Slaps 30% Tariff On Imported Cells & Modules).

"The safeguard duty recommendations are in line with what the industry was expecting. There is no question this will increase solar power costs, but the safeguard duty has been toned down from the initial 70% to 25% for the first year," said Raj Prabhu, CEO of Mercom Capital Group.

However, it is now up to India's Ministry of Finance to consider whether to accept the recommendation or not.