The Economic Times editorial ‘Sky-high duties will blister solar industry’, published January 14, 2018, talks about the proposal for increasing the duty on imports of solar modules, which has been made by the Directorate General of Safeguards, Central Board of Excise and Customs. It says that the domestic manufacturers of solar cells and modules would be harmed if this were not done. We will check the soundness of the editorial’s claims and also see if what need, if any, for an increase in import duties was felt.
But, first of all, let us see how India has been performing in the solar sector.
Solar Power: The Renewable Energy Revolution
India’s solar power sector saw the biggest-ever capacity addition of 5,525.98 MW in 2017-18.
A total 4,323.1 MW (including 207.92 MW Solar Rooftop) capacity has been added till November 30, 2017, making a cumulative figure of 16,611.73 MW.
This fiscal has also seen a decline in solar tariff to the lowest level of Rs 2.44/ kWh.
All these figures were made possible on the back of the following policy initiatives:
- Under the scheme for “Development of Solar Parks and Ultra Mega Solar Power Projects”, 35 solar parks of aggregate capacity 20,514 MW have been approved in 21 states.
- Kurnool Solar Park in Andhra Pradesh, with 1,000 MW capacity, has emerged as the world’s largest solar park.
- Bhadla Phase-II Solar Park in Rajasthan, with 650 MW capacity, has been commissioned, among other such projects.
- Grid-Connected Rooftop and Small Solar Power Plants Programme provides for the installation of 2,100 MW capacity through Central financial assistance up to 30% for residential, institutional and social sectors in General Category States, and up to 70% in Special Category States.
- The Suryamitra programme has been launched for the creation of a qualified technical workforce and over 11,000 individuals have been trained under the programme.
- ARUN (Atal Rooftop Solar User Navigator) mobile app has been launched for access to request submission and awareness under the solar rooftop programme.
- The National Solar Mission has set a target for increasing solar capacity from 20 GW to 100 GW by 2021-22.
We can see how the solar power sector has completely transformed the renewable energy landscape in India.
India is striving to achieve a renewable energy target of 175 GW by the year 2022. This includes 100 GW from solar power. The last three-and-a-half years have seen a capacity addition of 27.07 GW of renewable energy under Grid Connected Renewable Power, which includes 12.87 GW from solar power.
The Question of Raising Import Duties
The Economic Times editorial itself claims that there has been a surge in imports of solar cells and modules since 2014-15, mostly from China, with reports that almost 90% of domestic demand for solar panels is now met by imports.
Thus, there may be, prima facie, a case for increasing import duties – to ensure that domestic manufacturing, too, gets a needed boost.
If the Indian solar industry is growing into a giant, should it not primarily be on the back of domestic manufacturing, and not merely Chinese imports? A huge dependency on Chinese imports may also create a hindrance in future, especially if these manufacturers flood the market with cheap goods and then start raising their own prices. Or, hypothetically, even suddenly devastate the sector if any bilateral trade hostilities were to erupt in future. Or if the Chinese solar module manufacturing industry itself were to undergo some crisis of its own.
It must be remembered that this is a mere proposal from the Directorate General of Safeguards. It has not been accepted yet by the government, let alone be government policy. Again, as the editorial itself has pointed out, the proposed duties are only to be applied prospectively and would not affect ongoing projects.
Allowing for all possibilities and whatever decision is eventually taken by the government, it may be noted that higher duties have lately been imposed by both the European Union and the US on Chinese solar imports. So, it is not something unheard of.
In the end, India cannot be faulted for looking to protect its own interests, which would include the interests of its domestic manufacturers.
Read our other related articles:
Clouds Hiding the Sun? An Alternative to Business Line’s Gloomy Picture of Solar Power
New & Renewable Energy Sector in 2017: The Year in Review
Solar Alliance Becomes a Treaty-Based Organisation – How India’s Leadership is Paying Off
The Map of Solar Energy: A Review