Despite safeguard duty, India bought 20 per cent more solar modules and cells from China in 2019-20

India bought 20 per cent more solar modules and cells from China in 2019-20 compared with the previous year, in volume terms—showing that the 15 per cent safeguard duty that was applicable for that year was not effective.

India imported 405 million units last year compared with 336 million in the year before. However, because the prices of modules and cells fell, India’s imports of the Chinese modules cost only $ 123 billion in 2019-20, compared with $1.69 billion in the previous year.

The volumetric increase illustrates that Indian companies only bought more from China. In fact, imports from China outstripped India’s total imports of modules and cells, which grew in volume terms by 16.7 per cent in 2019-20 over 2018-19.

The decline in the import bill was therefore only because the module and cell prices continued to fall. In 2018, when modules cost around 26 US cents a Watt-peak, many experts predicted prices to fall to around 18 cents in five years—prices have fell to that level in just two years.

In 2018, the government of India imposed 25 per cent safeguard duty on solar modules and cells (cells are assembled to make modules) imported from China and a few other countries, applicable for one year from July 30, 2018 to July 29, 2019. The rate of duty would decline to 20 per cent and 15 per cent for the next two half-year periods.

The currently applicable safeguard duty of 15 per cent would expire this month. The government has said that it would bring in basic customs duty of 25 per cent for one year and 40 per cent after one year—a level that many module Indian manufacturers, such as Waaree, Adani Solar and Surana Solar, feel is inadequate.

Data shows (see table) that when the safeguard duty was 25 per cent imports from China fell, but when it stood reduced to 15 per cent, it didn’t stop imports.

Many developers and project building (EPC) contractors have said that it is going to be a tough task to desist from buying from China, given the compelling economics of it. Chinese prices are set to fall further, due to the glut caused by Covid-19-made slowdown.

Bikesh Ogra, Global CEO and Director, Sterling & Wilson Solar, which builds solar plants for energy companies, says that if one looked dispassionately, it would be very difficult not to buy from China. “They (the Chinese) have created a giant ecosystem,” Ogra told Business Line, stressing however that it was still necessary for India to promote local manufacturing.

Indian manufacturers have said that unless there is assured adequate protection for many years, it would be difficult for manufacturers to make a case for investing in module and cell manufacturing in India.

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