Category: China

Madras High Court postpones hearing on 70% safeguard duty to 2nd March, 2017

The Madras High Court has postponed the hearing on the recommendation of a 70 % safeguard duty on Chinese Solar module Imports to March 2, 2018 as per a report published by Mercom.

In a blog post published few days back, we had discussed the pros and cons of imposing a safeguard duty on Chinese Module imports.

Lets hope that the month of March brings greater clarity on this issue.

 

solar-energy-2157212_1920

 

 

 

 

 

 

 

Waiver of transmission fees and losses spells relief for the Indian wind and solar sector

In an order issued on 13th February, the power ministry has decided to extend the waiver of inter-state transmission fees and losses incurred on transmission of electricity from wind and solar sources.

The waiver is applicable for 25 years for all those solar and wind projects which will be commissioned till 31st March, 2022.  Earlier, the waiver was to conclude in 2019.

The waiver is subjected to the following conditions –

  • The waiver is applicable for all those solar & wind projetcs that are entering into PPAs with any entity including DISCOMS
  • The waiver will be allowed to only those wind and solar projetcs which are awarded through competitive bidding process in accordance with guidelines issued by the Central Government

This move is probably the first positive sign for the renewable energy industry this year. The Budget did not hold any jackpots so as to speak for the renewable energy industry.

Also, the last few months have held a lot of uncertainty for the Solar Sector with the Director Safeguards imposing a 70 % tariff on Chinese modules with little clarity on the future of  imported modules lying at the ports for commissioned projects. The order was stayed by Madras High court but no decision has since been announced.  

With the rollback of duty on tempered glass and waiver of transmission fees and losses, one does wonder if the 70% safeguard duty on Chinese modules might just become a reality.

 

Sources :

https://powermin.nic.in/sites/default/files/webform/notices/Waiver_of_inter_state_transmission_of_the_electricity.pdf

fre-sonneveld-1927-unsplash

Pic Credit : Fré Sonneveld

 

 

 

 

Future of Chinese Solar Module Imports in India likely to be decided on February 13th, 2018

In a previous post, we had discussed the pros and cons of a 70 % safeguard duty on solar modules being imported from China.

On January 19, the Madras High Court admitted Shapoorji Pallonji’s petition against safeguard duty and issued a temporary stay on the implementation of the recommendation, Economic Times Reports.

The petition claimed that since Shapoorji Pallonji was not given an opportunity to place its viewpoint before the DG Safeguards, the findings were “illegal, arbitrary, without authority of law and in contravention of the Customs Tariff Act”.

The High Court is likely to announce its decision on 13th February as per a report in Economic Times.

matthias.zomer.stock.photographer
Sources-

https://economictimes.indiatimes.com/news/economy/policy/high-court-decision-on-solar-imports-duty-likely-on-february-13/articleshow/62829118.cms

The case for and against safeguard duty on solar module imports from China

Last year, solar tariffs in India touched an all time low of Rs 2.44 Per unit i.e. 4 cents per kWh. This tariff was lower than coal at Rs 3.20 Per kWh, as reported by Economic Times .Experts said that a major reason for the fall in tariffs was availability of cheap solar modules from China.

On 5th January 2018, Directorate General of Safeguards Customs and Central Excise (DGS) recommended a 70 % provisional ‘safeguard’ duty on Solar Module/Panels imported from China, Malaysia and Taiwan. This news was received with much criticism from the Solar Developer community.

Since the news about the recommendation on ‘safeguard’ duty has come in, speculations are rife that Solar tariffs will rise again.You should know that solar modules account for nearly 60 % of the project cost so a change in price of module will impact the cost of production greatly. An article in  Business Line  quotes a Crisil Ratings Spokesperson talking about the impending rise in tariffs “The 70 per cent safeguard duty proposed will also inflate project costs by 25 per cent and crank up the viable tariff to Rs. 3.75 per unit from around Rs. 3 estimated earlier, making solar power less attractive to discoms. That would also be more than the average power purchase cost of 10 out of 14 discoms last fiscal.”

The most upsetting facet of this recommendation is that it puts to risk projects worth Rs 12000 Cr (and around 4 GW) as reported in the same article. These projects were auctioned in 2017.

We certainly hope that if the approval does come in for the DGS recommendation then the projects auctioned in 2017 are spared from the import duty.

Now, every coin has two sides. While the Solar Developers are unhappy with this recommendation, the domestic solar panel manufacturers are praying for an approval from the Finance Ministry.

According to the Preliminary Findings published by DGS, just about 53% of the production capacities of domestic solar manufacturers was utilized upto Sept, 2017. The finding is not surprising because Indian manufacturers held just about a meagre 10% market share in India.

As you may have guessed, employment in the domestic industry has taken a hit. The DGS report mentions how employment is on the decline when it should be rising. The same report also explains how a price cut by Chinese Imports has stopped Domestic Manufacturers from fixing a price that would help them break even. All-in-All, the last few years have painted a dreary picture for domestic manufacturers, while the country was going Ga-Ga over falling solar tariffs.

The Report emphasizes that a decrease in export of Chinese Solar Panels to USA &  EU has led to a surge in Chinese Exports to India. In H1 2016, China was exporting 18.51% of its solar modules to India which grew to an astounding to 38.77 % by 2017 H1. If this figure surprises you then hold your breath right there, China’s exports to USA and EU fell from 30.65 % in 2016 H1 to a minuscule 5 % in 2017 H1.The anti-dumping duty and countervailing duty  in USA against Solar Imports and Protective Measures in EU have channelized China’s energies to capture the Indian Market.

The Final question is that who should the government side with? Developers or Manufactures? Why don’t you tell us in comments.

Sources –

Import Duty on Chinese Solar Modules by Indian Government

You can read the sequel to this blog post here.

In our First Blog Post, We did a comparison between India’s Growth in Renewables against Global Growth using 2 different parameters. The first parameter showed the global growth inclusive of China’s contribution while the second parameter showed India vs World growth excluding China. Such has been China’s meteoric rise that it seems unfair to turn it into a benchmark for other countries.

On 5th Jan 2018, the DGS recommended a 70% safeguard duty on Imported Chinese Modules. An article in Bloomberg has reported how India bought a third of China’s $8 billion of shipments from January through September in 2017. These numbers have been sourced  from a BNEF research. The seriousness of the situation was  first realized in August 2017 when Economic Times reported that the DGAD is considering taxing Chinese Solar Module Manufacturers and Wind Energy Equipment Manufacturers. The application was filed in June 2017 against China, Malaysia and Taiwan.

The finance Ministry has not yet approved the tax on Solar Modules.  If the tax is approved, it will spell relief for Indian Panel Manufacturers but slow down the growth of the Indian Solar Industry. The speculations have left Solar Developers in despair.

An Important news that has streamed in this week, reported by Livemint,Donald Trump has levied 30% tariff on imported solar cells and module in the first year, with the duties declining to 15% in the fourth year. Lets see how this decision affects Solar module Prices globally and especially for India.

As mentioned earlier in the post, the tax is pending an approval from the Finance Ministry. This was not the first appeal registered by Indian Solar Manufacturers.Here’s a Snapshot of the appeals made since 2012 against cheap Imports from Neighboring South Asia countries countries as reported by Business Standard. What needs to be seen is that Will the Solar Manufacturers be lucky to have their way this time around?

Snapshot

2012: First case of dumping filed by group of indigenous solar cell & module makers

May 2014: identifies injury to tune of 60-110% by the US and China, finalises anti-dumping duty

June 2014: Finance ministry did not impose the duty, let it lapse

July 2014: Piyush Goyal urges domestic industry to drop case, assures enough demand pipeline| 950 Mw projects for domestic industry during 14-15

September 2016: WTO rules against India to have a separate solar programme for the domestic solar cell & module industry.

In our next blog post, we will discuss the repercussions of the Import Tariff levied by the Indian and American Government on the Indian Solar Industry.

Stay Tuned!

Note :-

The blog was updated on 26th Jan at 9:49 to change the import duty from 7.5 % to 70 %

You can read the sequel to this blog post here.

Source:-

  1. https://www.bloomberg.com/news/articles/2018-01-04/india-is-said-to-consider-7-5-tariff-on-imported-solar-panels
  2. https://economictimes.indiatimes.com/news/economy/foreign-trade/anti-dumping-authority-recommends-import-duty-on-solar-and-wind-energy-equipment-from-china/articleshow/59906447.cms
  3. http://www.business-standard.com/article/economy-policy/indian-solar-panel-makers-demand-anti-dumping-duty-against-china-117060600255_1.html
  4. http://www.livemint.com/Industry/rg4fMAJLJIrqg8urW2UzjI/Donald-Trumps-solar-module-tariff-barrier-may-help-Indias.html