India's anticipated import tariffs could dampen Modi's ambitious solar plans

New Indian Prime Minister Narendra Modi is eager to expand solar power generation in the country, but the import duties approved by the previous administration may sabotage those plans.

"It’s a nasty, poisoned gift from the outgoing administration to the incoming one," Tobias Engelmeier, founder of industry consultant Bridge to India, recently told Bloomberg, adding that everything from solar lanterns in rural villages to large grid-connected generators would become unaffordable. "It’s going to deflate the market terribly."

Just 25% of the 1.6 GW of PV capacity currently being developed would be finished if the tariffs were imposed, Bloomberg said, citing data from consultancy group Headway Solar. Referring to information from the Solar Power Developers’ Association, the new agency reports that the levees would double the cost of solar power in India.

The industry hopes to encourage the new government to withdraw support from the expected duties, which the previous administration approved in order to protect India’s fledgling solar manufacturing sector from cheaper PV imports from China and the United States.

Finance Minister Arun Jaitley, appointed by Modi, has until August 22 to implement the duties, which are backed by the Ministry of Commerce and Industry. Fellow government officials at the Ministry of New and Renewable Energy oppose the measure, however.

Tarun Kapoor, the joint secretary in the Ministry of New and Renewable Energy, told Bloomberg that the ministry’s role was very limited “as we can’t go to court against another ministry."

Modi led development of large-scale solar installations as chief minister of his home state of Gujarat and had promised to increase solar power generation in the country in an effort to reduce blackouts and ensure energy security.

The anticipated anti-dumping tariffs would range from $0.11 to $0.81 per watt on PV imports, doubling the price of solar energy to $0.20 a kilowatt hour, according to the Solar Power Developers’ Association.