Based on the final recommendations proposed by the Directorate General of Trade Remedies (DGTR), an official notification was issued by the India’s Ministry of Finance (Department of Revenue) on 30 July 2018. According to the notification, with immediate effect, the 25% safeguard duty will be imposed on imported solar cells (modules included) for a period of two years. The 25% duty is applicable for the first year (till end of July 2019). The duty is reduced to 20% for the first half of the second year and further reduced to 15% in the second half of the second year.
Besides that, should there be a subsequent anti-dumping duty imposed, the corresponding duties would be levied after the deduction of anti-dumping duty.
India market size
“In the 2017 calendar year, India added 8.04GW of solar energy grid capacity. But for India’s fiscal year, the volume is increased to 10.03GW. In the first half of this year, the newly installed grid capacity is nearly 6GW.” Energy Trend’s analyst Cao Jun Ru points out that as of end of June, solar power deployment would reach 24GW. The India government aims to achieve installed solar capacity of 100GW by 2020.
As the country with the largest module demand in the world and only second to China, PV InfoLink’s latest data indicates that with China’s “531” PV power policy, India will make up 13.6% of the global demand for modules. According to China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME)’s statistical data, for the period of Jan-May 2018, China exported USD 744.4 million of solar equipment to India, growing 31.8% YOY. India is China’s largest market for solar cells and modules. China accounts for over 90% of India’s imported solar cells and modules.
According to the customs’ data, China has exported modules of approximately 3.59GW in the first half of 2018 and solar cells over 700MW to India. Although there is a year-on-year decline in module exports, India is still highly dependent on China.
Impact of the customs duties
In fact, India’s anti-dumping investigations have been going on for a long time. China Photovoltaic Industry Association (CPIA)’s Secretary-General, Wang Bo Hua, analyzed the timeline of events: 2012 – India initiated anti-dumping investigations on solar cells and modules from China and America which concluded two years later without any duties levied; 2017 – India re-initiated the anti-dumping investigations and terminated the investigations in the following year. On 16 July 2018, it was revisited and drew to a close with duties imposed.
“For the past 8 years, China’s solar export market continues to decentralize, the emerging markets continue to flourish and expand,” says Wang Bo Hua who believes that “facts prove that trade protectionism is not on the way out.”
In the course of the interview, Mr. Wang says many believe that India’s implementation of protectionist measures, “will impact, to a certain extent, on the momentum of China solar exports by reducing the export volume and profits of solar exports to India. However, India’s solar cell and module manufacturing capacity is insufficient, it is still dependent on large quantities of imports. The overly high customs duties would lower the market’s growth in installed capacity. The 25% duty makes it more expensive to establish solar farms.
Industry analysts also predict that the growth of the India market is decelerating. “India is facing a stagnant demand for electricity, funding and other issues. This revised duty policy would worsen the situation to a certain extent,” says Cao Jun Ru. For the second half of the year, India’s module demand will reduce to 2.4GW – 3.5GW, while annual demand would be drop to 8.5GW – 9.6GW, she says.
“The objective of India’s revised customs duties is obvious, it is to protect the local manufacturers who are relatively lagging in terms of quality, scale or price.” Cao Jun Ru is convinced that along with the implementation of “531 New PV policy”, domestic PV products’ prices in China would fall and the continued overcapacity would need to be exported. “Despite the increase of 25% duties on China modules, China will still retain certain competitiveness in the India market, weakening the effect of the protectionist duties.”
PV InfoLink’s statistics demonstrate that local module manufacturing capacity in India is at an estimated 6GW, and battery cells at 2.5GW. Cao Jun Ru points out, “India’s domestic manufacturing capacity is insufficient, it is lacking in competitiveness – on quality and price – so even with the 25% customs duty, demand will still be there for imported solar cells and modules.”
“The safeguard duties would definitely impact the rate of Chinese PV enterprises entering India market. However, the bulk of the global PV supply chain remains in China. This situation remains unchanged.” New Energy International Alliance’s Vice Chairman & Secretary-General, Zhang Shi Guo, says it is important to strengthen operations in the international market. “(You) must diversify in foreign markets. (You) cannot be overly concentrated.”
In fact, the global PV market is undergoing decentralization. Wang Bo Hua says “let’s not be pessimistic about the global market”. According to statistics from CPIA, even though China is the largest exporter of solar cell and modules to India, China is rapidly shifting its attention to other emerging markets such as Australia, Mexico, Pakistan, Brazil, etc. For example, Trina Solar has recently clinched the partnership on Vietnam’s largest private solar project, and will be supplying 258MW of PERC monocrystalline double glass modules.
In addition, enterprises that set up factories in India and expanding their manufacturing capacity there, could avoid the impact of the safeguard duties. Some of the leading players have also built factories in South East Asia. India is a key region, but imposing a levy will have minor impact on these enterprises.
The tariff hikes are targeted at China and Malaysia. Therefore, those with factories in Vietnam and Thailand could have a new competitive advantage in the India market in the near future. Chinese solar enterprises that supply from Vietnam and Thailand are exempted from the duties payable.
“In 2017, Trina Solar has manufactured around 1GW solar cells in Vietnam. Our factory in Thailand also produced 1GW of solar cells and 750MW of modules,” says a Trina Solar vice president. The executive has previously stated that, in order to respond to America’s anti-dumping tariffs, Vietnam and Thailand manufactured products were used mainly to supply to America and Europe markets. Now, Trina Solar will fully utilize this advantage to service the India market and to expand its global sales distribution. India’s renowned consultation firm for renewable energy industry, Bridge to India, has data that reveals that Trina Solar’s India market share was over 25% in 2016. While in 2017, Trina Solar’s module shipment volume in India market was over 1.5GW.
Zhang Shi Guo also says China’s solar industry should pay more attention to their ability to provide a comprehensive service for managing their overseas investments. “Collaborating appropriately with local partners to expand together, investing in solar farms, overall engineering project management, involvement in energy services and developing an overseas supply chain.”
Jinnan Yao/ Xin Dong, China Energy News