The safeguard duty imposed by India on solar cells and modules from China, Vietnam, Thailand, and Malaysia is now expired, and the Government of India has decided to adhere to the advice of the Directorate General of Trade Remedies (DGTR) and extend the duty for another year, after taking into account the impact of imports on the domestic production capacity of solar power in India.
DGTR pointed out on July 20th that the incessant increase of solar cells imported from East Asia has prompted Indian solar manufacturers to constantly reduce their production capacity in order to maintain factory operation, and the accommodation period is obviously not long enough, despite the tax policy implemented previously by the government in the hope of protecting the country’s own industry.
India began imposing 25% of safeguard duty on solar cells and modules from China, Malaysia, Vietnam, and Thailand on July 30th 2018, which was reduced to 20% on the second year, and is now 15%, with the duty expiring at the end of July. The Government of India has decided to extend the safeguard duty for another year after considering the solar industry status of the country.
India will be imposing 14.9% of safeguard duty between July 30th 2020 and January 28th 2021, and 14.5% of safeguard duty until July 29th 2021. It is worth mentioning that Malaysia has been exempted from the duty due to its drastic reduction in imported solar products subsequent to the effectiveness of the safeguard duty, and only the solar products from China, Vietnam, and Thailand are being taxed right now.
Local Indian solar plants initially hoped to extend the safeguard duty for another 4 years with the tax rate elevated to 50%, as well as advised the government to increase the basic customs duty (BCD) to 20%, and an increase to 40% during 2021, though the Government of India believes that the 1-year extension is more than enough, and has yet to stipulate other plans regarding the BCD.
However, credit rating provider Fitch also commented that the simultaneous implementation of the safeguard tax and the increase in BCD will endanger the solar power of public utilities in India, as well as lower the relevant economic benefits.
(Cover photo source: Flickr/Bureau of Land Management CC BY 2.0)