No Reason For Safeguard Duties in India

Indian Parliamentary Committee Cautions Against Imposition Of Safeguard Duty For Fear Of Jeopardizing Existing Projects And Dampening Investor Sentiment
06:21 AM (Beijing Time) - 15. March 2018
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India has been contemplating firming up a Wind Solar Hybrid Policy since 2016, when it released a draft policy guideline to help it achieve the target of 100 GW of solar power capacity by 2022, as envisioned by Prime Minister Narendra Modi (pictured here). A parliamentary committee has now reminded the MNRE on its plans. (Photo Credit: Press Information Bureau)

Key Takeaways

  • India’s Parliamentary Standing Committee on Energy has questioned the logic behind imposing safeguard duties on solar equipment
  • In a report it states that such emergency measures could have the potential to cripple the entire solar sector
  • The committee says that safeguard duties of 70% will hamper the country’s own goal of achieving 100 GW of solar power capacity by 2022
  • The report recommends that such measures, if implemented, should not affect bids that have already been made

A parliamentary committee in India has said there is “no valid ground” to impose safeguard duties on solar equipment. If the recommended 70% duty is imposed, it would reportedly affect the viability of existing projects and dampen investor sentiment.

Interestingly, this argument comes from a panel comprised of India’s elected representatives. It is in stark contrast to another government entity recommending the move in the first place. The Directorate General of Safeguards, Customs and Central Excise had recommended duties to be imposed on solar cells imported from China and Malaysia (see India Contemplating 70% Safeguard Duty).

According to news agency Press Trust of India (PTI), the Parliamentary Standing Committee on Energy’s 39th report says safeguard duties “should not be of the tune (70%) that will hamper our own programme and it should not affect the bids which have already taken place.” Such emergency measures have the potential to cripple the entire solar sector, it stated.

Domestic manufacturing

India has practically no manufacturing capacity for polysilicon, ingots or wafers. As of July 31, 2017, solar cell production capacity in the country was 3.1 GW, while module capacity was higher at 8.8 GW. According to the Ministry of New and Renewable Energy (MNRE), the actual capacity utilization was 1.5 GW for cells and between 2 and 3 GW for modules due to stiff competition from imports.

Nevertheless, the committee says, “It is hard to believe that domestic manufacturing will reach the production and efficiency level required to meet the target of 100 GW of Solar Energy in the next 2-3 years,” according to PTI’s report. It supports the introduction of a dedicated program to support solar manufacturing, something the MNRE is already working on (see India: $1.71bn Local PV Manufacturing Plan).

Goods and services tax

In light of other issues plaguing the solar sector, the committee advised MNRE to address confusion regarding the goods and services tax (GST) on the renewable energy sector (see Solar Modules Get 5% GST Rate In India). This confusion could otherwise increase generation costs and threaten the viability of ongoing projects. In turn, that could hamper the nation in achieving the solar power capacity target of 100 GW by 2022.

The committee also pulled the ministry up on having fallen short of the targeted grid-connected solar power capacity of 10 GW during FY2017-18. The actual accomplishment was just 6,166.15 MW. The target for the next financial year is 11 GW.

The ministry has also suggested that the Wind Solar Hybrid Policy should be finalized “as early as possible.” In 2016, the government had released a draft policy for 10 GW of combined solar-wind capacity by 2022. There has been no official word on its status so far.

Last August, a parliamentary panel had asked the government to reconsider a rooftop PV target of 40 GW by 2022 (see Govt Panel Finds Rooftop Target Unrealistic).

 

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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Anu Bhambhani