New Delhi, Jul 19 (PTI) The commerce ministry's investigation arm DGTR has recommended imposition of safeguard duty on solar cells for one more year to protect domestic manufacturers and discourage cheap imports.
In its probe, the Directorate General of Trade Remedies (DGTR) has concluded that after a decline in imports in 2018-19 due to the imposition of safeguard duty on “solar cells whether or not assembled in modules or panels”, imports have increased during April-September 2019 due to reduction in rate of the duty from July 30, 2019.
In a notification, the directorate has said that there has been a significant increase in imports of the cells.
'The domestic industry is continuing to suffer serious injury which is evidenced from an overall consideration of its performance, particularly on the basis of its capacity utilization which is sub-par considering the demand of the product, increasing levels of inventory and negative profitability, it has said.
Though the domestic industry has improved its production and sales and reduced its losses, its position continues to be fragile and would relapse into further serious injury if the safeguard duty is discontinued, it added.
The imports of the cells into India, have not only continued to cause serious injury to the domestic industry but also threaten to cause serious injury to the domestic producers and 'it will be in the public interest to continue the imposition of safeguard duty' on the imports, the notification said.
'It is noted that the domestic industry has sought extension of the safeguard duty further for a period of four years...Keeping in view that two years of protection has already been provided and domestic industry has improved its position but needs some more time to adjust, extension of safeguard for a period of another one year would be adequate,' it added.
The directorate has recommended 14.9 per cent duty for the first six months from July 30 this year and 14.5 per cent from next six months. The finance ministry issues notification for imposition of these duties.
The directorate has also concluded that the cost on the solar power developers and the ultimate consumer will increase as a result of imposition of the safeguard duty, however, 'imposition of safeguard duty would be in public interest because it will prevent complete erosion of manufacturing base of solar industry in the country which has made substantial investments'.
Imports of solar cells and modules increased to 9,790 MW in 2017-18 from 6,375 MW in 2016-17. The duties were put in place on July 30, 2018. As a consequence, the import volume came down to 8,010 MW in 2018-19.
'But this decline in imports was short-lived as the import volume for the most recent period i.e. 2019-20 (annualized- actual data till September 2019) was 8,754 MW,' it added.
An application dated January 15, 2020 was filed before the DGTR by the Indian Solar Manufacturers Association (ISMA) on behalf of three Indian producers - Mundra Solar PV Ltd, Jupiter Solar Power Ltd, and Jupiter International Ltd for continued imposition of the existing safeguard duty against imports of the cells.
India imposed the duty for the first time on July 30, 2018 for two years.
China accounts for nearly 80 per cent of module supplies in India.
The renewable energy ministry has also proposed imposing customs duties on some solar power equipment as part of the country''s goal of becoming self-sufficient. PTI RR MR