Uncertainty surrounding the imposition of 70% safeguard duties in India may be at an end, though developers are unlikely to be happy with the outcome. (Photo Credit: TaiyangNews)
- The petition filed by Shapoorji & Pallonji against the DG Safeguards recommendation of a 70% safeguard duty on solar module imports to India has been dismissed by the Madras High Court in India
- This opens up the way for safeguard duties for an initial period of 200 days
- DG Safeguards will reportedly now communicate the decision of the Madras High Court by August 18 to the Ministry of Commerce, which will make the final call
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The uncertainty shrouding the issue of imposing safeguard duties in India has finally achieved a level of clarity, though not in a good way for PV project developers. The Madras High Court has dismissed the petition filed by project developer Shapoorji & Pallonji against the imposition of 70% safeguard duties on imported solar cells from China and Malaysia (see Call For Safeguard Duty Runs Into Legal Tangle).
This opens up the path toward levying safeguard duties for an initial period of 200 days, according to Mercom India Research. The Directorate General of Safeguards (DG Safeguards) will now communicate the decision of Madras High Court to the Ministry of Commerce, which will make the final call about levying such duties. It plans to submit the report to the ministry by August 18.
Project developers have been worried about the imposition of these duties for some time. It is still not clear whether they would be imposed on future projects or even entered into force retrospectively, which would increase costs for installed PV systems and thus endangering the viability of these projects.
Earlier this year, DG Safeguards had recommended a 70% safeguard duty on imported solar cells from China and Malaysia (see India Contemplating 70% Safeguard Duty). This has affected ongoing project considerations. Indian consultancy Mercom says that over 2 GW of tendered PV capacity has received poor response due to uncertainty surrounding safeguard duty in recent times (see Safeguard Duty Fears Affect PV In India).
PV industry experts see that between 3 GW to 4.5 GW of solar projects might not be built due to the 70% safeguard duties (see 70% Safeguard Duty Detrimental For 3 To 4.5 GW PV).
In March 2018, a parliamentary committee in India cautioned the government against imposing safeguard duties for fear of jeopardizing existing projects and dampening investor sentiment. It can “cripple the entire solar sector,” the report stated (see No Reason For Safeguard Duties In India). It recommended that the duty shouldn’t be as high as 70%.