Regulators in India are considering a proposal for legislation that could have a massive impact on Chinese and domestic solar power manufacturers and the progress of the sector generally.

A 70 per cent import duty is on the table as the country’s biggest developers look to halt cheap imports from China, Malaysia and other regions, which have fuelled the rise of solar power on the subcontinent.
Solar panels
China, in particular, could be hard hit, as it has been exporting much solar equipment to India, in a bid to offset oversupply at home.

FT reports that the duty was called for by some of India’s biggest panel makers, led by Adani Group. Their case was accepted by New Delhi’s directorate general of safeguards, which said it would propose an immediate 70 per cent tariff for 200 days until it can reach a more permanent conclusion.

In provisional findings, the DGS argued: “Increased imports, which show no sign of abating and, on the contrary, are further increasing significantly, threaten to cause serious injury to the domestic industry in the coming days.”

However, the news has not largely been well-received outside of those bigger firms.

“This is being done to protect only a few Indian manufacturers, but it will increase the cost of all solar installations,” said Sumant Sinha, chief executive of Renew Power. “This could put the industry in major uncertainty in terms of adding new capacity.”

It has also attracted criticism from smaller manufacturers, which say that by including raw materials under the tariff, the regulator has made it much more expensive for them to make panels. Only a handful of Indian companies make the individual cells that are then knitted together to make the panels, one of which will soon be Adani.

Abhinav Mahajan, director of IB Solar, a manufacturer based near Delhi, said: “They will kill us if they impose this tariff.”

The proposals are the latest in a series of international trade disputes surrounding the manufacture of solar panels. In 2013 the EU and China almost entered a trade war after the bloc imposed anti-dumping tariffs on Chinese solar panels. A year later, the US imposed duties of up to 165 per cent on imports from China and Taiwan, after it found panels were being sold too cheaply to the US market.

Chinese manufacturers have, in the face of that resistance opted to sell to India instead, increasing exports more than 1,100 per cent between 2012 and 2016. The US has also taken action against India, launching a successful challenge at the WTO against New Delhi’s requirement for local materials to be used under a government solar power scheme.

The proposals from India’s DGS could derail ambitious plans set by the government of Prime Minister Narendra Modi to build 100 GW of new solar power by 2022.

All the companies involved have the next few weeks to make their appeals to the DGS before a final decision is made.