Trade barriers alone won’t promote domestic solar manufacturing – Bridge to India

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on email
Bridge to India said the AD petition has created huge uncertainty for the entire solar sector. Credit: Getty

If India’s anti-dumping duty petition results in the introduction of trade barriers without other policy level reforms, it will fail to achieve its original goal of supporting domestic manufacturers, according to a report by consultancy firm Bridge to India.

Instead, the consultancy said duties alone are unlikely to have any enduring benefits for domestic manufacturing “beyond throwing a financial lifeline to existing manufacturers”. It also questioned the ability of duties to prevent Chinese manufacturers, who dominate Indian module supply, to circumvent duties by settting up manufacturing in other countries.

However, the potential of provisional safeguard duties, which are geographically agnostic, could hinder circumvention.

There has been talk of allocating multi-gigawatts of Central Public Sector Undertaking (CPSU) solar projects to domestic manufacturers, but the sector is still awaiting a clear policy, beyond duties, that can drive the local industry.

In any case, Bridge to India said the petition has created “huge uncertainty for the entire solar sector” and comes at time when an “already reeling” downstream industry is facing extra costs from the Goods and Services Tax (GST), a slowdown in tender activity and an increase in module prices.

The firm modelled the effects of various duty levels on projects earning 10%, 8% or 6% unlevered project IRR:

Credit Bridge to India

Noting a 3% fall in project returns if a 30% duty level were imposed, Bridge to India said: “The petition is a major risk to the viability of all pipeline projects, where modules have not yet arrived on site.”

Meanwhile, if provisional duties were imposed with no recourse for developers, they would also raise the risk not just of project completion delays but even of abandonment.

In event of duties coming in, Bridge to India said the best scenario would be if projects auctioned before the petition in July 2017 are grandfathered or if their extra costs are compensated for by the central government. However, the firm said the probability of such an outcome is “at best 50%”.

Projects auctioned while the decision is still pending will also be affected as developers face the challenge of correctly pricing risk. They have to decide between continuing overly aggressive bids just to win capacity or bidding for higher tariffs and causing the distribution companies (Discoms) to reel at the higher power costs and possibly to refuse to sign PPAs – a Discom tactic that has already been employed in many tenders of late.


Bridge to India said there was a “very strong buzz” in the industry that a duty announcement is due anytime now, and given how much pressure the government is under over its ailing ‘Make in India’ scheme, the consultancy said an imminent decision is possible.

If not immediate, then DGAD is required to conclude the investigation and give its recommendation to the Ministry of Finance within 12 months, subject to a 6-month extension in certain cases, with the final decision to be taken by the Ministry of Finance. After analysing previous cases, Bridge to India estimated that the final decision on anti-dumping duty on import of PV cells and modules could be expected by October 2018.

Simultaneously, many in the sector believe there is also a threat of provisional duties, which the consultancy said could be announced by February next year.

Pipeline threat

There was a 10,842MW utility-scale solar pipeline in India as of 30 September 2017 and Bridge to India said: “All these projects face threat of provisional or anti-dumping duty depending on when the decision is announced”. 

The following graph shows how the timing of the anti-dumping decision has a role to play in which allocated projects are affected.

Credit: Bridge to India

One would expect Domestic Content Requirement (DCR) projects, which use locally sourced PV equipment, to go on unharmed, but Bridge to India noted that such projects would also face cost increases as domestic module manufacturers would immediately raise prices if duties were imposed.

Ultimately, the consultancy said the Indian government faces a tough decision in trying to strike a balance between the needs of both the local manufacturers and project development activity.

PV Tech gathered industry views on the anti-dumping saga back in September.

Article updated to include the CPSU policy proposal.

Read Next

January 13, 2022
Reliance Industries has signed a Memorandum of Understanding (MoU) with the government of Gujarat for a total investment of INR5.955 lakh crore (US$80 billion) over 10-15 years to establish 100GW of renewables and set up green technology manufacturing facilities in the state.
January 10, 2022
Indian renewables company ReNew Energy Global Plc’s wholly owned subsidiary India Clean Energy Holdings has raised US$400 million through a green bond sale that will be used to support the company’s growth strategy and “refinance existing high-cost debt”.
January 10, 2022
Indian conglomerate Adani Group has set up a new subsidiary focused on areas including manufacturing solar equipment and producing green hydrogen.
January 7, 2022
India’s state-owned National Hydroelectric Power Corporation (NHPC) has signed an agreement with the Green Energy Development Corporation of Odisha Ltd (GEDCOL) for the development of 500MW of floating solar projects in the eastern state of Odisha.
January 6, 2022
Renewables developer Hero Future Energies (HFE) has formed a partnership with electrolyser manufacturer Ohmium International to develop and build 1GW of green hydrogen plants across India, the UK and Europe.
PV Tech Premium
January 5, 2022
After ramping up cell and module production capacity last year, Indian solar manufacturer and EPC firm Tata Power Solar is eyeing further expansions as it bids to take advantage of efforts from India’s government to bolster domestic PV manufacturing.

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
January 26, 2022
Free Webinar
Solar Media Events
February 23, 2022
London, UK
Solar Media Events
March 8, 2022
London, UK
Solar Media Events
March 23, 2022
Austin, Texas, USA
Solar Media Events
March 29, 2022
Lisbon, Portugal