India: Anti-dumping case comes at crucial time for solar, says Mercom Capital Group

A petition filed by the Indian Solar Manufacturers Association (ISMA) calling on India’s Directorate General of Anti-Dumping (DGAD) to introduce anti-dumping (AD) tariffs on solar imports from China, Taiwan and Malaysia comes at a critical time for the country’s solar industry, says Mercom Capital Group.

Having seen close to 10 GW of new capacity installed in 2016 amid record-low prices at auction, the momentum of the nation’s solar market could be derailed if measures to limit low-cost components from China are introduced, said Mercom Capital Group CEO Raj Prabhu.

“In all probability, the government is highly unlikely to disrupt the project development activity right when it is taking off and willingly create uncertainty in the markets when investors are warming to India’s solar sector,” Prabhu said.

The record-low tariff of INR 2.44 ($0.038)/kWh witnessed at the Bhadla Solar Park auction means that solar projects can now be commissioned at prices below that of coal, prompting Prabhu to add: “It is inconceivable that the Indian government will pursue this case, which would make the solar power procurement costs higher.”

The counter argument is that cheap Chinese components serve to boost installations only in the short term, pricing out Indian manufacturers increasingly left adrift in a free market landscape that inevitably favors the larger Chinese firms.

“This is not the first time there is a hue and cry against anti-dumping,” an official from the Ministry of New and Renewable Energy (MNRE) told Mercom Capital. “In 2012 a case was filed against the U.S., China and the EU; then in 2014 due to manufacturers’ demands the Ministry of Trade and Commerce gave a go-ahead to an AD petition, but after two years of investigating the issue and mulling over the findings, the petition was scuttled by the Ministry of Finance.”

The official added that in 2014, just after the government set its bold 100 GW of solar by 2022 target, the feeling within the industry was there was enough opportunity for both domestic and foreign manufacturers to meet the demands of the market.

However, since the U.S. successfully challenged India’s Domestic Content Requirement (DCR) with the World Trade Organization (WTO) last year, opportunities for Indian solar companies have been more limited. A source at Indian firm MoserBaer Solar Limited told Mercom Capital Group: “If you want your manufacturers to expand their capacity, make laws aiding them. The DCR category ensured local manufacturers had a set market, but now due to the WTO ruling even that is gone.”

The feeling among many Indian solar firms is that in the long-term, unchecked Chinese imports will create a vacuum as local companies are priced out, leaving the entire sector dependent upon imports from other companies. Despite the introduction of AD duties and a Minimum Import Price (MIP) on Chinese solar modules and cells in the EU, many European companies have gone bust in the face of China’s might. In the U.S., the recent Suniva insolvency has prompted the company to enact the Section 201 petition, which puts the issue of injurious trade practices before the U.S. president, Donald Trump. If Suniva wins this case, then it could adversely affect the U.S. solar market.

In India, the recommendation is for AD tariffs ranging from $0.11 to $0.81 per watt to be levied on solar cells and modules coming from China, Taiwan and Malaysia.