An engineer inspects solar panels at a site. (Photographer: Buddhika Weerasinghe/Bloomberg)

India Imposes Safeguard Duty On Solar Cells Imported From China, Malaysia

India imposed a safeguard duty on solar cells imported from China and Malaysia for two years, a move that’s expected to increase costs and push up tariffs from record lows.

A levy of 25 percent (ad valorem minus anti-dumping duty, if payable) has been imposed for imports in the first year starting July 30, and 20 percent and 15 percent for two subsequent six-month periods, respectively, according to a notification from the Department of Revenue.

Cheaper imports from China—that energy consultant Bridge To India said caters to nearly 85 percent of India’s solar panel requirements—had helped power producers quote record-low tariffs in auctions. They remained near all-time lows in the recent auction for 3 gigawatts of projects by the state-run Solar Energy Corporation. The Directorate General of Trade Remedies had recommended the safeguard duty after Indian Solar Manufacturers’ Association filed an application in November saying that the domestic industry sustained heavy losses due to a surge in solar cell imports.

Panels account for over half of a solar power project’s cost and a safeguard duty may affect 11-12 gigawatts of projects that are under construction, Girish Kadam, vice-president & sector head of Corporate Ratings at ICRA Ltd., had told BloombergQuint earlier. Prices of modules imported from China had fallen from 35-36 cents in four weeks to about 28-29 cents in mid-July, Kadam had said. The price hasn’t changed much since then, he said after the government notified the duty.

Project costs of solar projects based on imported modules could increase by nearly 15-20 percent (at current prices) if the safeguard duty is imposed, Crisil had said in a prior note. To maintain returns, developers may have to hike tariffs by 30-35 paise per unit.