The first hearing of India’s solar PV anti-dumping case was held on Thursday, 18th July 2013. Last month, it was announced that investigations by the Directorate General of Anti-Dumping (DGAD) have found enough prima facie evidence to suggest that dumped imports are hurting the domestic industry. This meeting was attended by more than 100 participants, including the three petitioners and around 12 respondents from the US, China, Malaysia and Taiwan. The remaining participants were ‘affected parties’, which included solar power project developers, EPC contractors, glassmakers and electric cable manufacturers.
- The investigations now need to determine the extent of damage to the domestic industry and then determine the ‘margin of dumping’
- Creating trade barriers such as anti-dumping duties create insulated zones of limited competition driving up the cost of solar power setting back the path to parity
- The governments efforts should go towards fostering innovation in India to provide solar solutions
The three petitioners, Indosolar, Jupiter Solar Power and Websol Energy System, had filed a petition last November seeking anti-dumping duties on import of solar PV cells and modules from the US, China, Taiwan and Malaysia. According to reports, these companies have now filed a fresh petition seeking to expand the scope of these investigations to imports from the EU and Japan as well.
In similar investigations globally, the US and the EU have already imposed anti-dumping duties on Chinese module manufacturers and in response, China has imposed duties on poly-silicon imports from the US and South Korea. Unfortunately, the global trend is one of increasing market protectionism, which cannot be in the interest of either the industry as a whole or the power consumers/tax payers.
The investigations now need to determine the extent of damage to the domestic industry and then determine the ‘margin of dumping’. The margin of dumping refers to the difference between the ‘normal value’ and the ‘export price’ and is usually expressed as a percentage of the ‘export price’. The margin of dumping will depend on the price differential that existed for a period of 18 months starting January 1st 2011. Based on the information submitted by the complainants and other interested parties, the market is expecting anti-dumping duties of more than 20%. The announcement of the final outcome can take another two to four months.
If the anti-dumping duties go through, the biggest beneficiaries will be the Indian cell manufacturers and, to some extent, suppliers from countries which are not under investigation. Suppliers from the countries under investigation will stand to lose the most. Developers who have recently been allocated projects in Tamil Nadu, Andhra Pradesh, Uttar Pradesh, Punjab and Karnataka are at risk of being squeezed between commissioning deadlines and a rise in prices which might make many projects nonviable.
According to BRIDGE TO INDIA, trade barriers such as anti-dumping duties create insulated zones of limited competition, allowing higher-cost manufacturers to survive, driving up the cost of solar power. Creating such a bubble would make some sense,only if it is accompanied by a credible long-term strategy for making Indian manufacturing internationally competitive. We currently do not see such a strategy and thus worry that a growing Indian solar industry will indefinitely depend on government protection. In any case, the overall growth of the Indian solar market will be slowed and the cost to tax payers or power consumers of generating solar power will rise. The market is currently very close to parity. Under conditions of parity, solar power can be an excellent tool to increase India’s power supply, energy security and bring distributed power solutions to unelectrified parts of the country. Raising the cost of solar will set parity back.
If India wants to support a domestic solar industry, it should look not towards cell and module manufacturing, but towards the downstream employment, towards the balance of systems and towards innovation.
Most solar jobs will be created downstream in construction, installation and maintenance, rather than in highly automated manufacturing processes. Increasing the cost of modules and thereby slowing solar installation growth down will likely have a negative effect on employment.
Modules account for less than 50% of the project cost and India can still focus on manufacturing of other equipment used for a solar power projects. Large global inverter manufacturers such as Schneider, ABB, RefuSol and AEG are already manufacturing solar inverters in India without any incentives or protectionist measure. The government should try to provide incentive to promote manufacturing of inverters and other BOS components where Indian manufacturing already has an advantage.
The main growth will come through Indian solar innovations under robust, commercially sustainable market conditions. The fundamentals in favour of solar in India are very strong and possible applications of solar many. Solar can provide power solutions to telecom towers, rural villages, new urban developments, diesel users, utilities, households or individuals. India is an ideal laboratory for developing such solutions. The governments efforts should go towards fostering innovation in India to provide solar solutions.
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