Solar gear importers likely to face steep dumping duty.

NEW DELHI: India is likely to impose a steep duty on importers of solar cells following vociferous complaints from domestic manufacturers, threatening the viability of about 4,000 Mw of recently tendered solar power projects across the country.

Although the ministry of new and renewable energy (MNRE) did not disclose the numbers, the officials said on the condition of anonymity that the duty is likely to be high given that the initial investigation has found the dumping rate to be about 80%.

Even a minimal amount of duty could escalate the cost of solar power production by at least Rs 1.5 crore per Mw from the current Rs 7-8 crore, said an MNRE official.

"Solar projects under both solar mission and state projects will get stuck when the prices go up if a dumping duty is imposed. The state governments have written to us earlier saying that if the cost goes up, they might scrap their solar programmes," the official said, adding that this could lead to a big contractual problem since it was not possible to retract the power purchase agreement after signing it.

In a letter written to the Solar Energy Corporation of India (SECI), the executing body of Jawaharlal Nehru National Solar Mission (JNNSM), a group of solar power producers said that power generation and transmission being a pass-through activity, the increased cost of power production would be borne by the consumers. "Any increase in cost of projects or cost of generation will directly result in increase of power tariff to the consumers.

Therefore, keeping the objectives of the government of India into consideration, the dumping duty must not be imposed on solar cells/modules," said the letter, which was reviewed by ET. Under its flagship solar programme JNNSM, the government has envisaged to make cost of solar power the same as conventional power by 2017 and have 20 Gw of solar capacity by 2022.

MNRE officials said the commerce department had not heeded their demand of clamping a stay on the case and might forward their recommendation of high antidumping duty anytime this week. "The directorate general of antidumping (DGAD) will send its recommendation of high anti-dumping duty any day this week, most likely by the middle of the month. The percentage of anti-dumping duty will be proportional to the amount of import.

China, being the biggest importer, will face the maximum heat," an official said. Commerce ministry officials had earlier told ET that they were contemplating a higher antidumping duty as the government sought to bolster manufacturing in the country.

"We may incentivise foreign producers to come up and set up operations here and create jobs, like it was done 30 years ago in the auto sector," a commerce ministry official said.

The domestic manufacturers of solar cells had alleged in their application to DGAD in 2012 that the US, China, Japan, European Union, Malaysia and Taiwan were exporting solar equipment to India at "ridiculously low prices" due to which "the local industry is bleeding".

Due to cheap imports flooding the Indian solar market, major domestic manufacturers have either shut down their facilities or have reduced production by more than half.

Source : economictimes.indiatimes.com