India recommends 25% safeguard duty on solar imports from China, Malaysia

  • Economy
  • Tuesday, 17 Jul 2018

“However, the exporters, especially from China, Malaysia and Taiwan, intend to annihilate the domestic industry in India,” it said.

“However, the exporters, especially from China, Malaysia and Taiwan, intend to annihilate the domestic industry in India,” it said.

KUALA LUMPUR: India’s Directorate General of Trade Remedies has recommended an imposition of 25% safeguard duty on solar cell imports from China, Malaysia for a one year period as the imports have threaten to cause serious injury to the domestic producers of the equipment.
The department said the recommendation was due to increased imports of solar cells, assembled in modules, and it is in the public interest to impose safeguard duty on imports.

It recommended that after the first year, the duty will be lowered to 20% in first six months of the second year and will be further cut to 15% for rest of the year

It said the request was made by the domestic industry for imposition of provisional safeguard duty by the Indian Solar Manufacturers Association (ISMA) on behalf of five Indian producers.

The five are (i) M/s Mundra Solar PV Limited, Gujarat; (ii) M/s Indosolar Limited, Uttar Pradesh; (iii) M/s Jupiter Solar Power Limited, Himachal Pradesh; (iv) M/s Websol Energy Systems Limited, West Bengal and (v) M/s Helios Photo Voltaic Limited, New Delhi.

According to the statement posted on its website, the five companies had sought for the imposition of safeguard duty on imports of “solar cells whether or not assembled in modules or panels” (product under consideration or PUC) into India.

The proposal then was to protect the domestic industry of like or, directly competitive products from serious injury / threat of serious injury caused by their increased imports. 

“The applicants have claimed that on account of the surge in imports of the PUC, many domestic producers have kept their production facilities almost idle and the heavy losses have crippled the domestic industry. 

“For this reason, the applicants had requested for imposition of provisional safeguard duty as a measure to mitigate their injury,” the department said.

Upon examining the request, it found there existed critical circumstances which warranted imposition of provisional safeguard duty in order to provide interim relief to the domestic industry from suffering irreparable damage, which could have been difficult to repair.

In the preliminary findings it was observed that China has more than doubled its production capacity of solar cells from 11.12 GW in 2012 to 27.78 GW in 2016. Similarly, the production capacity of Solar Modules increased from 12.46 GW in 2012 to 35.47 GW in 2016.

“The interested parties have not questioned the data. They have only argued that domestic consumption in China is more than its exports in the year 2017. However, such submissions fails to address the idle capacity in China and the shift in pattern of trade,” it said.

In the preliminary findings, it was observed that during the past two years, both its direction and volume of export trade changed in a significant manner towards India.

It is clear that while China’s exports to India constituted a paltry 1.52% of its total global exports during 2012, this increased to 29.8% during 2017.

However, as a percentage of the total imports of the PUC into India, the imports from China  and Malaysia individually account for more than 3% while the share of every other developing country is individually less than 3%. 

Also, the collective share of the developing countries whose individual share is less than 3% does not exceed 9% of the total imports of the PUC into India. 

Therefore, the import of the PUC originating from developing countries except China PR and Malaysia, need not be subjected to levy of Safeguard Duty in terms of proviso to Section 8B(1) of the Customs Tariff Act, 1975.

The department said the petitioners support the initiatives and have made significant investments in installed capacity. 

“However, the exporters, especially from China, Malaysia and Taiwan, intend to annihilate the domestic industry in India,” it said. 

“The safeguard duties will provide an incentive for continuous investment, capex expansion and reduction in cost by achieving the economies of scale,” it said.

The department said the imposition of safeguard duty is also in the larger public interest as (i) It will lead to an increase in employment, increase in capex expansion, increase in capacity utilization and will also promote investment in R&D; (ii) increase in FDI flow and the exporters will be encouraged to invest and make in India.

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Economy , Corporate News