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SEZ solar units hit by blind spot in safeguard duty
Lack of clarity on whether the 25 per cent safeguard duty (SGD) on imported cells and modules will apply to solar manufacturing plants in special economic zones (SEZs), which account for 70 per cent of domestic capacity, have got major domestic players worried over the future of their investments in such units.
The finance ministry last month notified 25% SGD on imported solar cells and modules to check dumping by Chinese-owned companies in the mainland and Malaysia. This was done on the recommendations of Directorate General of Trade Remedies. The notification did not clarify whether the duty will apply to items supplied to the local market, called ‘domestic tariff area’ in industry parlance. Since SEZ units use imported components for solar manufacturing, the companies say the ambiguity in the notification could hit their investments and cause loss of jobs.
The Adani group, Vikram Solar, Websol Energy and Renewsys are among the major investors who have set up solar manufacturing facilities in SEZs. The manufacturers have now knocked on the finance ministry’s doors to clarify that SGD will apply only on the value of imported cells used by SEZ units to manufacture modules that are then supplied to DTA. They have also requested the ministry to clarify that the SGD will not apply to solar modules manufactured and supplied to DTA by using imported wafers or other raw material that are not within the scope of DGTR’s anti-dumping probe.
The National Solar Mission envisages 100 giga watt GW of solar power generation capacity by 2022 and a total domestic manufacturing capacity of 4-5 giga watt (GW) by 2020. India has commissioned close to 15,000 MW of solar power capacity and 5,000 MW more is at various stages of execution. But industry data pegs the current manufacturing capacity at 3,164 mega watt (MW) for solar cells and 8,398 MW for solar modules.
This has led to a skewed market and opened the gates for dumping. There are a handful of manufacturers, while solar power project developers have mushroomed, leaving the field wide open for Chinese manufacturers, who have failed to set up plants in India.