India braces for anti-dumping duty decision

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India’s Ministry of Finance is to announce a final decision on anti-dumping duties for solar imports (ADD) on Friday.

Talking to PV Tech, managing director of developer, nv vogt, Deepak Verma said he is hoping no ADD is imposed, as it is “like taking away [Indian consumer’s] right to light, to energy”. If approved tomorrow, ADDs will “raise pricing for the Indian consumer, on a product that is not a luxury item, it is like your right to light, to energy, and that cost is going to go up, and that makes no sense,” added Verma.

Solar analyst, Bridge to India’s senior manager, Jasmeet Khurana told PV Tech the imposition of duties would “not only harm the larger market but also the prospects for manufacturing in India.”

Earlier this month the Associated Chamber of Commerce and Industry of India (ASSOCHAM) said project costs would increase by 18.83%, to as much as 75%, if duties are imposed.

Verma predicted that any ADDs will have a negative effect on the amount of solar deployed, and the amount of solar energy contributing to India’s energy mix. 

Verma explained that for the several state and national solar programmes, including the recently announced 500MW Andhra Pradesh solar auction, “there are certain pricing expectations” that will have to be “redone” if ADDs are introduced tomorrow.

ADDs will “impact our ability to bid competitively for these projects”, claimed Verma.

“I have every expectation these duties won’t kick in, and I will be really disappointed if they are,” he added.

Khurana says that most industry stakeholders “put the odds of implementation of duties at 50:50”.

Project developers, including India-based Welspun and several industry analysts have also warned that anti-dumping duties would pose a serious threat to India’s solar industry.

The opposing argument, supporting the implementation of ADDs has been mostly voiced by large domestic manufacturers, however even domestic products’ prices are going to “shoot up” if the duties are implemented, according to Verma.

The main advocator for ADDs is domestic manufacturer and developer, Tata Power.

CEO Ajay K Goel told PV Tech in June: “There has been so much overcapacity and so much dumping that if we do not take dramatic action now, then within six months the Indian manufacturing industry will be dead.”

“[Anti-] dumping is a short-term solution. The government has to provide a level playing field and allow the Indian manufacturers to grow,” he said.

“After a while once the industry gets on its own two feet and reaches a certain scale, then those duties can be scaled back,” Goel said.  

Tata Power and Welspun declined to comment further on the issue today.

Competition

Senators for the US state of Ohio, Rob Portman and Sherrod Brown, wrote a letter to the United States Trade Representative (USTR) opposing Indian ADDs on US equipment, stating concern from the “harmful consequences” of closing off the market.

The senators asked the USTR to continue to contest any ADDs decided, with the World Trade Organisation (WTO).

Verma agrees that ADD will not save domestic manufacturers, “it will hurt them and developers and consumers, that is a lose-lose-lose situation”. 

Imposing duties on foreign products is “not the way to build a globally competitive domestic industry” said Verma, “it is a self defeating circle”.

In May, the Department of Commerce ruled that dumping had taken place, proposing duties of US$0.81/W for Chinese firms, US$0.11/W duties for thin-film manufacturer First Solar, which has made ground in the Indian market.

US silicon-based panels will be subject to US$0.48/W duties, and Malaysian manufacturers will face US$0.62/W and Taiwanese firms, US$0.59/W.

If ADDs are enforced Bridge to India predicts the predicted pipeline of 1.6GW of solar for the coming year, will diminish to just 0.55GW, with 1.05GW, including 75% of state solar schemes’ capacity, scrapped or delayed.

As agreements have already been made for the latest round of the national solar mission, Bridge to India hopes just 100MW, or 14% of signed PPAs will forfeit.

The remaining 400MW of solar projects from third and private parties, or 90%, could face the scrap heap as a result of ADDs.  

Developers will “more or less stop buying modules from China, Taiwan and Malaysia” says Khurana, but might continue to buy from the US as the duties are lower.

Domestic suppliers will increase procurements, but imports from countries such as South Korea, Singapore, Philippines and Japan, will still be preferential over Indian suppliers, predicts Khurana.

With cheaper Chinese, Malaysian and Taiwanese modules excluded, but other international suppliers charging more, the costs for solar modules in the country will go up by 15-20% and project cost will go up by 7-10%, predicts Khurana.  

With 25 year power purchase agreements (PPA) increasing by around INR0.70 perkWh, and long term effects including reductions in state solar programmes, a delay in grid parity and a two year flux in the industry before prices settle again, says Khurana.  

Resolution

If anti-dumping duties are not enforced, “there will be some other government initiative to promote domestic manufacturing” says Khurana.

Domestic content requirements could be increased, with more local content applied to government solar projects, says Khurana, such as the 8.8MW announced recently for railways.

To incentivise developers to pick domestically manufactured solar equipment, the government should award developers with long term finance, said Verma.

“If I were able, as a developer, to get more expensive products but with three to five years financing, at competitive terms, I would look at that really carefully; there are ways to stimulate demand and sales, without being protectionist,” said Verma.

If the combination of a higher initial price, and better financing provides a lower cost overall (LCOE), “I would take it”, said Verma.

All the way to the top

With the Ministry of New and Renewable Energy, the Ministry of Finance, and the Department of Commerce all in opposition, Verma predicts the final decision will go all the way to the top, to the new prime minister, Narendra Modi.

“On one hand, the decision should to be investor friendly and ambitious about solar targets. On the other hand, the government wants to promote manufacturing in India. The Ministry of Finance has to take a call considering both the points of view” says Khurana.

“I think [Modi] will make the call [against ADD],” predicted Verma, citing the prime minister’s previous solar success as chief minister in the leading solar state, Gujarat.  

Verma said it is also expected that Modi will raise the national solar mission target for 20GW by 2020 to encourage domestic manufacturing to meet the new demand.

Welspun has also previously argued that the anti-dumping measures go against the newly elected prime minister’s vision. Modi called for every household to have at least one light bulb and sees solar playing a large part in that ambition. In the BJP’s 2013 manifesto, continuous power, solar-powered agriculture pumps and street lighting are all specifically mentioned.

Last week, Minister of State for Commerce and Industry, Nirmala Sitharaman proposed ADD could be reimbursed back to developers, but analysts slammed the re-imbursement idea as “foolish”.

“But fingers crossed, I think it will come out against ADD – but you never know, it is a new government, there are competing forces,” warned Verma. 

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