Bengaluru: The Ministry of Finance has notified the Directorate General of Trade Remedies decision to impose safeguard duty on solar panels imported from China and Malaysia, which is certain to raise tariffs of future solar projects. More than 90% of solar panels and modules used in Indian solar projects come from these two countries.
The DGTR had recommended the imposition of 25% safeguard duty on solar panels from these two countries about a fortnight ago for one year, followed by 20% for the next six months and 15% for another six. It did so on the grounds that such imports were causing “serious injury” to domestic solar manufacturers. The duty comes into effect from July 30.
The DGTR had responded to a complaint from the Indian Solar Manufacturers Association (ISMA) last December by conducting its own investigation. The probe concluded that indigenously made solar cells and panels, which constituted just 10% of Indian solar projects in 2014-15, had fallen even further in subsequent years. Solar developers preferred Chinese and Malaysian solar equipment, as it was cheaper than that manufactured in India.
Solar developers had been opposing strongly on the grounds that it would raise tariffs, as they would have no option but to pass on the extra charge to discoms and ultimately consumers. This in turn might slow down India's ambitious solar programme which aims to have 100,000 MW of solar capacity by 2022. They noted that local manufacturers do not have sufficient capacity to meet their needs.
Solar tariffs are currently at around Rs 2.75 per unit, on par with that of thermal power, but safeguard duty is expected to raise it by at least 50 paise, according to developers.