The Director-General of Trade Remedies (DGTR) conducted an oral hearing where domestic and international industry representatives put forth their representations about the continued imposition of safeguard duty (SGD) on the import of solar cells and modules to India.
Representatives from the domestic industry stated that the two-year-long safeguard duty regime was not sufficient and asked the DGTR to extend the duty until 2024. They recommended the duty to be reimposed, starting at 15% and subsequently lowered by 0.05% annually over the next four years.
They also suggested the inclusion of Thailand and Vietnam under the scope of the safeguard duty as imports from the countries had increased notably over the last 14 months.
A representative for the Solar Power Developer Association (importers) and Thailand responded that new countries could not be added under the ambit of the duty, but an extension may be possible. The representative, however, expressed that a four-year extension was not fair and suggested that the proposed annual duty reduction was too little.
Representatives for Malaysia, Indonesia, China, and Taiwan presented their concerns and asked to be excluded from the duty, citing potential issues with other bilateral agreements with India. They said that if reimposed, the safeguard duty, in addition to the government’s proposed 20% basic customs duty (BCD), would result in international trade issues.
In line with this, a representative from the Shapoorji Pallonji Group pointed out that the industry has already suffered as a result of the imposition of the safeguard duty the first time around citing the numerous petitions filed for reimbursement under the “Change in Law” provision of power purchase agreements (PPAs). They argued that the burden of this ultimately falls on the developers and consumers of power.
The DGTR heard the representations of all the parties present and asked them to submit their arguments in writing by July 9, 2020, and to submit further rejoinders on July 13, 2020.
The 25% safeguard duty, announced on July 30, 2018, was imposed on solar cell and module imports from China and Malaysia, to protect domestic cell and module manufacturers. The duty was set at 25% for the first year, followed by a phased down approach for the second year, with the rate reduced by 5% every six months until it ends on July 31, 2020.
The Directorate General of Trade Remedies initiated a review investigation in March 2020 to see if there was a need to extend the safeguard duty beyond its deadline following an application filed by the Indian Solar Manufacturers Association (ISMA). They sought for the duty to be extended by another four years. The domestic manufacturers filing the petition had provided import data released by the Department of Commerce from 2014-15 to 2019-20 (up to September 2019) for this investigation.
Mercom has previously reported that solar developers were struggling to get reimbursed for additional expenses that were incurred as a result of the duty imposition. They said that it has adversely affected their business, and consequently, the pace of project development in the country.
The domestic solar module manufacturers also expressed their discontent months after the safeguard duty imposition. They stated that the policy had failed to achieve the desired objectives of protecting domestic manufacturers from a sudden surge of imports since the safeguard duty was imposed for only two years, and the implementation period of utility-scale solar projects is 18 to 24 months.
Earlier in May, the DGTR extended the deadline for filing responses to a questionnaire investigating the continued imposition of the duty because of the nationwide lockdown.
Nithin is a staff reporter at Mercom India. Previously with Reuters News, he has covered oil, metals and agricultural commodity markets across global markets. He has also covered refinery and pipeline explosions, oil and gas leaks, Atlantic region hurricane developments, and other natural disasters. Nithin holds a Masters Degree in Applied Economics from Christ University, Bangalore and a Bachelor’s Degree in Commerce from Loyola College, Chennai.