NEW DELHI: In line with the Centre’s current policy on limiting imports into sensitive sectors, especially from countries with hostile interests such as China, the government has now extended the safeguard duty on solar cells for another year.
The move comes after a recommendation by the commerce ministry’s Directorate General of Trade Remedies (DGTR) earlier this month to continue the duty which had first been imposed on solar cell imports from China and Malaysia in July 2018.
While this provision was set to run out at the end of this month, the DGTR had already initiated a probe into whether the duty was needed or could be done away with. Sources said that the investigative wing
believed that there was still a substantial danger of cheap import dumping. Over 80 per cent of solar cells used in India originate from China.
In fact, the DGTR probe found that after a fall in solar cell imports in 2018-19 after the safeguard duty had been imposed, there had been an increase in imports during the April-September period of 2019 because the duty rate had been decreased from July 30, 2019.
With the DGTR’s findings paralleling the Centre’s current policy to limit Chinese gear imports in the power sector, the Department of Revenue’s circular dated July 29, 2020 says that it “seeks to continue the levy of safeguard duty on imports of solar cells (whether or not assembled in modules or panels) for a period of one year, in pursuance of final findings of review investigations issued by DGTR”.
According to the circular, a duty of 14.9 per cent will be levied for six months from July 30, 2020, to January 29, 2021, and then it will be 14.5 per cent between January 30, 2021 and July 29, 2021.Industry experts are currently uncertain whether this safeguard duty extension will be accounted as part of the
20-25 per cent customs duty increase proposed earlier in June.
Surge in imports
Imports of solar cells and modules rose to 9,790 MW in 2017-18 from 6,375 MW in 2016-17. The duties were put in place on July 30, 2018. As a consequence, the import volume came down to 8,010 MW in 2018-19. India imposed the duty for the first time in 2018, for two years. China accounts for nearly 80 per cent of module supplies.