India Solar Anti-dumping DGAD Oral Hearing

The Office of the Directorate General of Anti-Dumping (DGAD) held an oral hearing regarding the anti-dumping petition filed by the Indian Manufacturers Association (ISMA) against cells and modules from China, Malaysia and Taiwan.

DGAD has already sampled solar modules and cells exported by 17 companies from China, Taiwan, and Malaysia as part of its ongoing solar anti-dumping investigation in India.

Both the parties, Indian module manufacturers and module exporters to India presented their views on the anti-dumping investigation and its validity. The hearing was presided over by Sunil Kumar (IAS), the Additional Secretary and Designated Authority, in the DGAD conference room, New Delhi. Both the parties put forth their ideas for the DGAD’s office to deliberate upon.

A senior executive with one of the major Indian module manufacturers told Mercom that they raised the point with the presiding dignitary that the prices of finished modules (the final product) from the subjected countries (China, Taiwan and Malaysia) after being shipped to India are less than the cost of module manufacturing in India.

“We made the investigators aware that in absence of domestic content requirement (DCR) category tenders, the module manufacturers need support from government in form of anti-dumping duty on foreign module imports. From December 14, 2017, there is no more DCR, what are we to do then? Up till now, there has been no groundwork seen on the proposed 7.5 GW CPSU program. There is no market for Indian manufacturers,” added the executive.

Key Points Raised by Domestic Indian Module Manufacturers at the Hearing

  • The market share of domestic manufacturers is only 7 percent because of dumping.
  • Once ADD (anti-dumping duty) is levied, they will increase the capacity to match the demand.
  • The landed price of module from the subjected countries are artificially cheaper than the cost of module manufacturing in India.
  • After the last recommendation of ADD (which eventually was not notified by GOI), GOI promised to take care of domestic manufacturing in the DCR tenders. However, after the loss at WTO, DCR tenders have been discontinued. Thus, in absence of support in terms DCR tenders, it is required to protect Indian manufacturers against dumping.
  • In spite of the petitioners’ recent profits, they still do not see a reasonable profit of 22 percent as a result of dumping.

Counter Points Made by Module Exporters to India at the Hearing

  • The landed price of modules as compared to the prices of non-subjected countries are comparable. Hence, there is no dumping.
  • The claim of 22 percent as reasonable profit by petitioners are not maintainable as per proceedings of the ADD. Anyway, profitability of petitioners have increased from -80 to 35 as per index of 100 BPs (basis points).
  • The cost of module manufacturing in India has reduced from 100 BPs to 20 BPs from year 2013 to year 2017; whereas the sale price has reduced from 100 BPs to only 85 BPs, which is why balance sheets of petitioners have improved during the period. As a result, their EBIDTA has increased from 100 to 350 whereas PBT (profit before tax) has increased from 100 to 250.
  • As per MNRE, there are about 115 module manufacturers and about 30 cell manufacturers in India corresponding to capacity of about 8 GW and 3 GW respectively. Their PLF is about 87 percent.
  • Cells and modules are two different products and should not be clubbed together. Similarly, multi crystalline and thin film are two different products and should not be treated similarly. This has also been endorsed by ADD proceedings in USA and EU.
  • Petitioners have claimed that only about 50 module manufacturers are present in India, which is not true, and the combined market share of petitioners is only about 7 percent, which is less than the threshold value of 25 percent as per the standing of the proceedings.
  • Even if the protection were to be given to petitioners in terms of ADD, they will not be able to match asking rate of 15 GW a year as per the NSM target.
  • The benefit of low module prices has been passed on to consumer by solar power developers by offering lower tariffs which is not the case with domestic manufacturers.
  • The open category tenders do not differentiate between domestic modules and imported modules. Thus, module transaction will entirely be dependent on market and economic factors rather than protection given in terms of ADD.
  • The DCR modules are inferior in terms of quality.
  • Government of Taiwan made a statement that their export to India is only about 0.4 percent. So, they should be excluded from the ADD proceedings.
  • Government of China made a statement that they have been cooperating with Indian authorities and ADD should be properly investigated and be levied only if there is merit to it.
  • Government of Malaysia made a statement that ADD would be a violation of Free Trade Agreement (FTA) between the countries.

Another senior executive with one of the largest Indian module manufacturers said, “They say that our modules are of low quality. I want to ask them, if you won’t allow us our market where will we get the revenue to invest in a top-quality manufacturing line? Having said that, I would like to say that the idea of Indian modules being low quality is rubbish. Everyone buys from us, including all major rooftop developers, EPC companies. Anti-dumping must be levied.”

H.R. Gupta, General Secretary of Indian Solar Manufacturers Association (ISMA) told PTI, “We are positive in our approach that we have been able to evidence relevant aspects of the case to endorse our strongly held belief of predatory pricing and urgent remedial action is required in order to save investments, employment, improve energy security & derail the skewed import dependence.”

DGAD - India Solar Anti-dumping Timeline

As the next step after the oral hearing, the affected parties will present their written submissions by Dec 19, 2017, and thereafter the petitioners (ISMA) will respond to these submissions by January 2, 2018. A DGAD official had previously told Mercom, “The law provides the DGAD’s office to submit recommendations within a year. We are working on a war footing to get this done – we cannot say exactly how many months will it take.”

Mercom previously reported the government’s announcement citing that all projects that have been auctioned recently and for which PPAs have been or will be signed before the imposition of the anti-dumping duty will be exempted from the effects of the anti-dumping duty. These project developers will not have to bear the extra cost burden if anti-dumping is imposed.

The Indian Solar Association (ISA) recently met with the Minister of Power to discuss the implications of the anti-dumping investigation. During the proceedings, the Indian Solar Association submitted a letter suggesting that the anti-dumping investigation be stopped, and the proposed anti-dumping duty be done away with for the greater good of the Indian solar sector.

Most of the industry believes that it is not a matter of whether an anti-dumping tariff will be recommended, but rather a question of how aggressive will the recommendation be. Recently the U.S. International Trade Commission recommended lower than expected tariff in the Suniva anti-dumping case setting a precedent for India.

Image credit: Mercom India

Saumy Prateek Saumy is a senior staff reporter with MercomIndia.com covering business and energy news since 2016. Prior to Mercom, Saumy was a copy editor at Thomson Reuters. Saumy earned his Bachelors Degree in Journalism & Mass Communication from the Manipal Institute of Communication at Manipal University. More articles from Saumy Prateek.