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REGULATION | Staff Reporter, India
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India launches fresh wave of anti-dumping duties on solar equipment

The duty is expected to raise the cost of solar projects by 2-4%.

The Directorate General of Trade Remedies (DGTR) has provisionally determined dumping margins for Aluminium and Zinc coated flat products originating in or exported from Korea RP (20-30%), Vietnam (10-20%) and China PR (30-50%) and recommended imposition of provisional anti-dumping duty on the same.

According to CARE Ratings, DGTR invited comments on preliminary findings from all stakeholders within 21 days from the date of issue of preliminary findings. The firm commented, “The imposition of anti-dumping duty will increase the cost of solar power projects by 2% to 4% and it may impede the growth of solar power in India.”

Amongst the imported products is PosMAC (POSCO Magnesium Aluminium Alloy Coated Steel) which has a self-healing system and prevents corrosion from red-rust at edge. The economic life of PosMAC is 25 years coterminous with solar panels economic life which makes it suitable for solar structure fabrication and support structure.

According to CARE Ratings, the cost of these supporting structures is approximately $43,549.5-$50,818.25 (INR 0.30 to 0.35 crore) per MW i.e ~8.5 to 10% of total project cost of $508,182.50 (INR 3.50 crore) per MW.

“Hence, anti-dumping duty at above mentioned dumping margins may lead to tariffs increase of approximately 6 to 8 paisa per unit. However, imposition of anti-dumping duty is an event of change in law for under construction projects and therefore pass through option will be available for additional capex incurred by project developers,” said CARE Ratings senior director Amod Khanorkar.

As per the DGTR, imports of Aluminium and Zinc coated flat products have increased relative to consumption in India. Imports sharply increased from the range of 5-10% of consumption in 2015-2016 to 35-40% of consumption during the period of investigation i.e October 2017 to September 2018 (12 months period).

The demand from domestic market has increased substantially for aluminium and zinc coated flat products due to the demand in solar energy sector, Khanorkar said. According to CARE Ratings, the solar sector will require about 2.1 million tonnes of aluminium and zinc coated flat products to achieve ambitious solar energy target of 70GW by 2022. Solar panels require aluminium and zinc coated flat products of around 30 MT/MW for mounting structures.

CARE Ratings expects capacity addition to be in the range of 7.5GW to 8GW during FY2020 as a result of anti-dumping duty and dismal tender activity during FY2018-2019.

Solar capacity additions have been sluggish during FY2018-2019 (refers to period 1 April to 31 March) on account of Goods and Services Tax (GST) implementation issues, imposition of safeguard duty on imported cells and modules.

Solar capacity addition slowed down to 6.5 GW in FY2018-2019 against 9.5 GW in FY2017-2018. Capacity addition further slowed down to 1.35 GW during Q1FY2020. 

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