Solar cell imports: EU, Japan question safeguard duties recommended by India

The European Union and Japan have questioned the preliminary safeguard duties of 70 per cent on imported solar cells recommended by the Directorate General of Safeguards in India, adding to the on-going debate on the appropriateness of the duties.

“In a meeting of the World Trade Organisation (WTO) Safeguards Committee on Monday, the EU and Japan criticised the conduct of the investigations and the initial findings leading to the proposed safeguard duties on solar cells in India. New Delhi, however, stated that it follows WTO rules and regulations on the imposition of safeguard measures,” a Geneva-based trade official told BusinessLine .

The EU alleged that India’s injury analysis on imported solar cells was inconclusive and its causal analysis doubtful. It added that India’s actions would create serious domestic shortages and even risk the environment and urged the country from imposing any definitive measure.

Japan, in its observations, pointed out that an investigation should include reasonable public notice and other appropriate means to ensure interested parties can present evidence.

In response to the EU and Japan, India’s representative said the preliminary duties were challenged in the domestic courts, so the matter is sub judice . “India has nothing further to add at this stage other than to say that its investigation will be carried out in line with WTO rules,” the representative said.

Disruption to business

Following a complaint by domestic solar manufacturers last year, who said imports of solar panels and modules were causing serious disruption in their business, the Directorate General of Safeguards had, in January, proposed a 70 per cent safeguard levy on solar panel imports. Safeguard duties are penal import duties when there is a surge in imports of an item leading to injury to domestic industry.

China and Malaysia would be the most affected if the safeguard duties are imposed as these countries account for most of the imported solar equipment into India.

Solar power developers in India have strongly opposed the move to impose safeguard duties as they say that the additional duties would raise construction costs and solar tariffs leading to a slowdown of the sector.

According to an analysis by credit rating agency Crisil, a high duty of 70 per cent on modules and panels from China and Malaysia has the potential of putting at risk up to 3 gigawatt of solar projects worth over ₹12,000 crore under implementation.

“The conflict of interest between domestic solar power developers and solar cell manufacturers is something that the Standing Board on Safeguards, headed by the Commerce Secretary, has to take a call on,” a government official said.

New Delhi, however, is unwilling to accept the allegation made by the EU and Japan on the improper conduct of investigations.

“India tries to follow the methodology suggested by the WTO for calculating anti-dumping and safeguard duties very religiously. It is not right to question the appropriateness of the investigations,” the official added.

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