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Chinese Imports, Divided Industry Cast Shadow On Solar Power

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India’s solar power industry is divided over the issue of anti-dumping duties on solar cells and modules as a crucial hearing nears.

The Directorate General of Anti-dumping and Allied Duties (DGAD) will hear the case on December 12. The petition filed by manufacturers’ body Indian Solar Manufacturers Association (ISMA) argues that the import of solar cells from China, Taiwan and Malaysia is hurting the domestic industry.

“The purpose of anti dumping duty is that manufacturing should prosper in India and not in these countries. Import of solar equipment is causing losses to Indian manufacturers,” said Dhruv Sharma, chief executive officer of Jupiter Solar Power Ltd. Sharma is also the coordinator of ISMA.

Dhruv Sharma, CEO, Jupiter Solar Power Ltd.We don’t mind Chinese manufacturers setting up manufacturing units in India but they should not be allowed to import solar modules at cheap prices and hurt the domestic manufacturers. Indian manufacturers have capacities which are not utilised and operating at 30-40 percent capacity level.

Duty Opposition

However, solar power producers are against the imposition of an anti-dumping duty.

“If anti dumping duty is imposed on solar equipments, it will increase power tariff. Irrespective of whichever country it (equipment) is coming from, the benefit is being passed on to the consumer,” said Sanjeev Aggarwal, managing director and chief executive officer of Amplus Energy Solutions Pvt. Ltd, a solar rooftop project developer.

Aggarwal further said that government’s decision to auction 20 GW of solar power generation capacity with mandatory domestic manufacturing clause is a better way to support local manufacturers.

84 percent of solar equipment requirement in the country is met through imports from China, according to a report authored by renewable energy consultancy Bridge To India.

Solar modules account for more than half of a project’s total costs, according to Bloomberg New Energy Finance. Major Chinese solar module makers include Trina Solar, Jinko Solar, Canadian Solar, JA Solar.

Gagan Vermani, managing director and chief executive officer of MYSUN, a solar rooftop solutions provider, is also of the view that additional duties will push up power prices and harm the customers.

Gagan Vermani, MD and CEO, MYSUNAnything which will impact the demand supply cycle and have negative impact on the consumer cycle is not good. Any restrictive activity on market dynamics will have a negative impact not just on quality but also the prices as they will increase.

Also Read: Rising Chinese Solar Panel Prices May Put Indian Projects At Risk

The Price Gap

According to data available with Bloomberg New Energy Finance, Chinese solar modules were priced at 32-36 cents per watt compared to domestic solar modules at 37-43 cents per watt, in October.

“Indian solar IPPs have always been able to negotiate aggressive prices from Chinese module manufacturers. On the other hand, Indian module makers sold products that were costlier by 5–10 cents per watt,” said Allen Tom Abraham, analyst at Bloomberg New Energy Finance.

“The higher than anticipated demand in China and U.S. in the second half of 2017 has stopped the declining trend of Chinese module prices.

Allen Tom Abraham, Analyst, Bloomberg New Energy FinanceSubsequently, the price gap between domestic and imported modules has narrowed but there still exists a price differential of 3–8 cents per watt between the two as of October.

Timing Is Critical

Kameswara Rao, partner, (energy, utilities and mining) at consulting firm PwC India expressed concern on the timing of a potential levy.

“Procurement lead times have grown longer this year due to heavy demand, and an abrupt levy can render some of the upcoming projects unviable. Developers should be given a short window of time to make changes so that project deadlines are not affected,” he said.

Rao added that the real issue is creating the right conditions for growth of domestic manufacturing, including right policies, incentives and infrastructure.

Kameswara Rao, Partner, (energy, utilities and mining), PwC India Germany and China, among others, did this to develop the manufacturing ecosystem. In its absence, a mere levy will only increase costs and reduce attractiveness of solar power to utilities.

The Government View

The Ministry of New and Renewable Energy has cautioned DGAD on imposition of high duties on solar equipments as that could increase power tariffs and render projects unviable.

“It should not affect existing projects. DGAD should not impose high anti-dumping duty on the solar equipments. We have tried to cover interests of both sides and provide cheap power to public. If they impose anti-dumping duty, it should be operational in a year to give time to manufacturers for future projects,” said an official from the ministry, on the condition of anonymity.

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