Higher Customs duty sought on solar module, cell imports from China

The All India Solar Industries Association (AISIA) has written to the PMO seeking higher Customs duty, to counter dumping of solar PV modules by China, which they say is coming in the way of Atmanirbar Bharat.

Hitesh Doshi, Chairman, AISIA, told BusinessLine that urgent effort to create a level playing field is needed if the country is serious about reducing its dependence on China, which contributes 85 per cent of Indian solar components.

For starters, the industry is seeking assistance in the area of module manufacturing. A PV module is an assembly of photovoltaic cells which go into the final making of a panel.

Manufacturing is dominated by China and the Indian government had first taken note of this in 2018. From July 30, 2018, for a year, the government levied safeguard duty of 25 per cent on solar modules and cells from China and Malaysia. Subsequently safeguard duty will come down to 20 per cent in the second year and 15 per cent in the third year on imports.

“We want the safeguard duty on modules and cells to continue for another three years,” said Doshi. Additionally, AISIA is asking the government to impose at least 50 per cent of Basic Customs Duty (BCD) from July 1, 2020 for modules and from July 1, 2022 for cells. “This will give enough time to build cell manufacturing capacities in India and will also bring in investments into India especially for cell production.”

Another reason for imposing this duty is to help Indian domestic manufacturers transition from assembly to value-addition across the whole manufacturing chain. “Cell to module manufacturing contributes to 50 per cent of the total value chain,” pointed out Doshi. The remaining 50 per cent value-addition comes from wafer to cell (23 per cent), polysilicon (10 per cent), and polysilicon to wafer (17 per cent).

In the last few years, the industry had bypassed China, Malaysia and some of them imported from Vietnam and Thailand. “The imports from developing countries which are currently safeguard duty-free should be brought under the safeguard duty umbrella as per WTO norms,” said Doshi.

The Power Ministry has a list of renewable energy equipments which are eligible for duty free imports for manufacturing, which includes solar cells and modules. “The list is outdated as it was issued in 2012 and has not been updated to factor in changes in technology,” said Doshi.

AISIA also pointed out that duties on raw materials such as glass, steel, aluminium and others, make the local product expensive.

“The cost structure becomes high as locally there is very less availability of materials that go into solar products,” said Sesha Prasanna, MD of Bengaluru-based Espee Solar.

There are other niggling issues such as lack of finance availability, blockages in working capital as a result of GST and inclusion of only Indian companies in the Approved List of Models and Manufacturers (ALMM). “Issues such as requirement of too many complex certifications and registrations as compared to other countries which is a drag on time and costs, need to be done away with,” said Doshi.

India targetting creation of 175 GW of renewable energy capacities by 2022. AISIA believes that government intervention now in many areas will help in kicking off manufacturing.