Solar Manufacturers Ramp Up Expansion Plans by 4 GW in Anticipation of Import Tariffs in India

Proposed protectionist measures are prompting solar manufacturers to expand their domestic production capacity in India


The ongoing solar anti-dumping case and the 70 percent preliminary safeguard duty proposal are prompting various domestic and international players to announce plans to expand their solar manufacturing capacity in India.

These companies are betting that the government will carry on with its plans to support the domestic solar manufacturing sector by imposing tariffs that would benefit local manufacturers. The sentiment is evident in the 4 GW of collective capacity expansions that solar manufacturers have proposed for India in 2018.

“Even with all these announcements, there is no guarantee that most of this proposed capacity will actually get built unless a substantial tariff is imposed on imported components and banks are willing to lend money to build solar manufacturing units,” said Raj Prabhu, CEO of Mercom Capital Group.

The anti-dumping case has given new wind to the sails of many beleaguered as well as established Indian solar component manufacturers. Since the filing of the anti-dumping petition last year, Indian manufacturers have been gradually announcing plans to expand their module and cell manufacturing capabilities. According to Mercom’s India Solar Manufacturing Tracker, so far 28 Indian firms have announced expansion plans since the initiation of the anti-dumping investigation.

It is also a well-known fact within the industry that the average selling price (ASP) of Indian cells and modules is not low enough to compete with the ASPs of their Chinese counterparts, as there is a 10 to 15 percent price difference.

Solar Manufacturers Ramp Up Expansion Plans by 4 GW in Anticipation of Import Tariffs in India

It all began in June 2017 when the Indian Solar Manufacturers Association (ISMA) filed an anti-dumping petition against solar imports from China, Taiwan, and Malaysia with the Directorate General of Anti-Dumping (DGAD) requesting the levy of an interim duty on imports. Since then, there has been an upsurge in announcements to expand manufacturing capacity by both Indian and international firms in India.

Then, in December 2017, ISMA filed a petition with the Directorate General of Safeguards Customs and Central Excise that sought the imposition of a separate safeguard duty on imported solar cells from China, Malaysia, Singapore, and Taiwan. In a preliminary finding issued in January 2018, the Directorate General of Safeguards Customs and Central Excise recommended that a 70 percent safeguard duty be imposed on solar cells imported from China and Malaysia for 200 days. The case is currently under deliberation at the Madras High Court.

All of these developments are prompting companies to announce expansion plans in India as they see the government moving towards an import tariff at the behest of the country’s solar manufacturing sector.

The planned capacity comes at a time when the ASPs of Chinese modules remain high in India. According to Mercom’s 2017 Q4 and Annual India Solar Market Update, the ASP of Chinese modules rose to $0.36 (~₹23.45)/W in Q4 2017 from $0.35 (~₹22.80)/W in Q3 2017, an increase of four percent quarter-over-quarter. The increase was less steep than the 14 percent rise in ASP logged from Q2 to Q3, however, module prices increased for a second quarter in a row.

ISMA recently withdrew its anti-dumping petition but plans to refile it again in April. This means that the possibility of an anti-dumping tariff will continue to loom over the industry for months. More importantly, manufacturers are betting that a safeguard duty will come to their rescue in the short-term. Though these are just announcements, manufacturers want to send a signal to policy makers that they are willing to expand if the right amount of tariff is imposed to make them competitive.