Hectic lobbying on against anti-dumping duty on imported solar modules

Now that the Directorate General of Anti-Dumping of the Ministry of Commerce has recommended anti-dumping duties (ranging from 11 cents (₹6) to 81 cents (₹47) per watt of module capacity, hectic lobbying is underway to get the Ministry of Finance to break the convention and not notify the duties.

On Tuesday, the Confederation of Indian Industry issued a statement cautioning the Government that the proposed anti-dumping duties would “lead to a complete collapse of the solar sector” in India.

China kept at bay These duties cover specified solar module manufacturing companies in China, Taiwan, Malaysia and the US, but are most effective against imports from China. Lending support to CII was Union Transport Minister Nitin Gadkari, who wrote to Commerce Minister Nirmala Sitharaman asking her to scrap the proposed anti-dumping duties.

Today, the US India Business Council joined the chorus by writing a letter to Finance Minister Arun Jaitley imploring him to reject the proposed duties.

The Council has tellingly said that the anti-dumping duties, if brought into force, would lead to abandoning of several solar power projects won under the recent round of bidding of the National Solar Mission, and currently under construction.

“Many projects under development will simply not be commercially viable and will not be constructed,” the Council has said. It has also pointed out that since bidding for these projects was based on the prevailing tax and duty regime, any changes to this regime, including the potential imposition of anti-dumping duties, “will significantly increase project and electricity costs and have serious implications for commercial viability.”

Stressing that the Council was not unaware of the need to foster a strong domestic manufacturing base, the letter said that the best way to do that, though, was “open markets, demand visibility, low-cost financing and bankable government policies” (and not offering protection from imports.)

Whom does it protect? Adding to the high-decibel clamour against the duty imposition, a Delhi-based solar consultancy, Headway Solar, released a white paper which said that the duties would only benefit “a handful of cell manufacturers, but will harm a majority of domestic module manufacturers, who rely on the Chinese and Taiwanese for cells. (In the production chain for solar modules, poly silicon is made into ingots which are sliced into wafers. The wafers are arranged into cells and cells into modules, which are what we see in solar plants, facing the sun. In India, there is module-making capacity of about 2,000 MW but only about 700 MW of cell capacity — the rest of the module makers import cells. Solar power companies say that cell capacity is effectively only about 100 MW. So “whom are the anti dumping duties meant to protect,” the ask.)

The manufacturers, on their part, note that they have made considerable investments in setting up factories to produce cells and/or modules and the Government should look the other way when the Chinese and others have been selling below costs to capture the Indian market. The power companies reply that they wouldn’t buy from Indian manufacturers anyway because the domestic products are way behind the imported in terms of quality.

Official recommendations As the Directorate General of Anti-Dumping has given its recommendations it is up to the Ministry of Finance to decide on brining them into force, but experts have pointed out that MoF has never gone against DGAD’s recommendations, given that issues relating to dumping are the Directorate’s domain.

Regardless, the developers are pressing ahead with their lobbying efforts, and are actively supported by the Ministry of New and Renewable Energy, as well as several State Governments.