Solar project developers anticipate a rise in module prices to drive up overall project costs following the recent import duties on solar glass.

Recently, the Ministry of Commerce and Industry imposed anti-dumping duty in the range of $658/MT to $664/MT for imports from China and $570/MT to $664/MT from Vietnam. The Ministry also imposed countervailing duties ranging from $539/MT to $664/MT.

Glass manufacturer Borosil Renewable initiated the investigation into the alleged dumping of solar glass from China and Vietnam into the domestic market.

Borosil said, “We firmly believe that while restoring fair competition and creating a level playing field for domestic manufacturers, this will encourage rapid and significant growth in domestic manufacturing of solar glass, leading to exponential growth in India’s solar glass industry.”

While domestic solar glass manufacturers welcomed the imposition of duties, solar developers fear project costs will increase as module prices rise.

Laxit Awla, CEO of SAEL, opined that the price hikes resulting from these duties are high enough for foreign suppliers to absorb them internally. “The cost increases are likely to be passed over to developers. Given the competitive margins, this price increase will likely result in higher bids for upcoming solar projects.”

Other developers like Hanish Gupta, Managing Director at Sunkind Energy, concurred. “As a direct result of these duties, Approved List of Models and Manufacturers (ALMM)-compliant solar module prices have increased by about ₹1,000 (~$11.46)/kW, creating added pressure on project costs.”

Indian consumers, including developers, would also face challenges from likely limitations in sourcing materials matching the quality and reliability of imported products. “While imposing safeguard duties supports local industries, it also creates short-term hurdles for consumers relying on affordable, high-quality imports.”

Gupta said there would be a supply shortage as an immediate consequence of duty imposition due to increased module costs.

Mercom had estimated that duty imposition could increase module prices to approximately ₹450 (~$5.30)/module of 540 Wp -550 Wp, resulting in an increase of ₹0.80 (~$0.0094)/Wp to ₹0.90 (~$0.011)/Wp. Some domestic manufacturers had also increased prices by ₹2 (~$0.024)/Wp to ₹2.5 (~$0.029)/Wp.

Developers foresee a substantial but gradual shift away from imported components.

According to Awla, the domestic manufacturing sector is still scaling up capacity. “Until Indian manufacturers fully bridge the gap in production capacity and quality standards, imports will continue to play a role in meeting the needs of developers, albeit at reduced levels due to the higher costs associated with duties. Over time, as domestic capabilities improve, reliance on imports is expected to decline further.”

Concerns regarding domestic manufacturers’ capabilities to match the quality and reliability of imported modules remain, given their relatively recent entry into large-scale production compared to established global players.

Developers are worried about efficiency gaps and real-world performance compared to imported modules. In the past, developers have faced issues such as higher degradation rates and lower conversion efficiencies, which can impact project returns and profitability.

Awla said it is too early to comment on whether developers would invoke a “change in law” event following the imposition of duties on solar glass imports. “At this stage, it is difficult to predict whether developers would invoke ‘change in law’ clauses due to module price changes resulting from anti-dumping duties. However, given that such regulatory changes can significantly impact project economics, developers may explore contractual provisions allowing adjustments or compensation under unforeseen regulatory shifts.”

Gupta said some developers might invoke change-in-law clauses to safeguard their financials, while others may absorb the additional costs depending on their contracts and project margins.

Solar developers caution that any further duties must be carefully calibrated according to prevailing market conditions. Awla said that considering India’s rapid growth trajectory and increasing demand for solar energy solutions, excessive or poorly timed duties could pose challenges for manufacturers and developers alike.

Gupta added that duties should only be considered after strengthening domestic manufacturing. Increasing duties without ensuring sufficient supply and quality control will only drive up costs, making projects less viable while imports continue to fill the gap.