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Weekly update: Indian manufacturer’s perspective on anti-dumping duties

Weekly update: Indian manufacturer’s perspective on anti-dumping duties

In a follow up to our last weekly update (refer), this week, we here present a manufacturers’ perspective on the current anti-dumping investigations in India. BRIDGE TO INDIA has consistently held the view that anti-dumping duties are not beneficial for the overall development of the solar market in India. We believe that if India wants to support a domestic solar industry, it should not look towards cell and module manufacturing. Instead it should aim to create a stable industry downstream (EPC, installation, maintenance), in the balance of systems and with respect to innovation. Protectionist measures will only create insulated zones where non-competitive players will survive and the cost of solar power will remain high, stifling growth. However, this week, we look at anti-dumping duties from the manufacturers’ perspective.

  • The plea that increase in prices of solar power with anti-dumping duties will impact the industry holds little ground
  • DGAD admitted that there is enough prima-facie evidence to back the Indian manufacturers’ claims that injury has been caused to the domestic industry
  • Adding more countries to anti-dumping investigations might dilute Indian manufacturers’ case

First of all, the imposition of anti-dumping duties ‘usually’ follows a legal process as laid out by the World Trade Organization (WTO) and cannot therefore be mistaken for an ill-informed government policy. If a petition meets the WTO standards and the procedure is followed by the book, there is very little impact of a country’s policy objectives. So, the plea from project developers that prices of solar power will go up with anti-dumping duties and that it might harm the industry, holds little ground as far as the proceedings are concerned.

However, political pressure can have an effect on the outcome. This can be seen in EU’s anti-dumping case against China. The influence of China as a major trading partner has ensured that EU allows both sides to negotiate and come to a solution. In response, China has not imposed anti-dumping duties for poly-silicon on manufacturers from the EU, as it might do against suppliers from the US and South Korea.

Now, as far as India’s anti-dumping investigations are concerned, the manufacturers seem to be fairly confident that they have put forth enough evidence to show injury to the domestic industry has been caused because international suppliers which have been selling modules in India at prices below the market cost. The Directorate General of Anti-Dumping Duties (DGAD) has already taken cognizance of this fact and admitted that there is enough prima-facie evidence to back the manufacturers’ claims.

The manufacturers are also confident that the other side, which mainly consists of around 12 respondents from the US, China, Malaysia and Taiwan, is on a weaker footing. Their claim is supported by the fact that most of these respondents have suffered significant financial losses in the past two years by selling at unviable prices.

Indian manufacturers also feel that their case, at least against the Chinese suppliers, has been bolstered by rulings in both the US and the EU. Based on the proof of injury and costs submitted, Indian manufacturers are expecting duties of at least 47% and up to 200% in some cases. However, they are aware of the international pressure on the subject and as a back-up option, are ready to accept duty levels that allow for a level playing field. This would mean duties of around 20% (refer to BRIDGE TO INDIA’s analysis on anti-dumping duties in the January 2013 edition of the India Solar Compass).

Even though Indian manufacturers realize that international pressure has the potential to dilute their efforts, they have still gone ahead and submitted a petition to add the EU and Japan to the investigations. According to unconfirmed information available to us, at the time of submission of the first petition, sales from EU and Japan were not meeting the 3% minimum market supply share criteria required for a country to be named in a petition. Now, however, the market-share for supplies from these countries has changed.

BRIDGE TO INDIA thinks that perhaps Indian manufacturers have been ill-advised. Adding more countries to the investigations might dilute their case and increase international pressure.

Even though anti-dumping duties will provide a temporary lease of life to the domestic players, no one seems to have a plan to make domestic manufacturing competitive in the long run. Without it, anti-dumping duties will have no long-term impact.

This post is an excerpt from this week’s INDIA SOLAR WEEKLY MARKET UPDATE. Sign up to our mailing list to receive these updates every week.

You can view our archive of INDIA SOLAR WEEKLY MARKET UPDATES here.

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