Various ministries of the Indian government are considering to impose anti-dumping duties on solar photovoltaic modules imported from the US, China, Malaysia, and Taiwan. The Commerce Ministry has undertaken a preliminary inquiry into the impact of large-scale import of solar modules on the domestic manufacturers.
The Indian solar module manufacturers have been lobbying for anti-dumping duties on imported equipment for several months now. Some of the major manufacturers like Moser Baer, Indosolar, and Lanco Solar have been hit hard by the surge of imported solar power equipment in the country. Some of these companies have been forced to shut down manufacturing while other are facing losses worth millions of dollars.
To protect the domestic manufacturers the Indian government had proposed to increase restrictions on the use of imported equipment in the second phase of the ambitious National Solar Mission which aims to add thousands of megawatts of solar power capacity.
Following this proposal, the US filed a request with the World Trade Organisation (WTO) to intervene and protect the interests of the American manufacturers. According to some estimates, US-based First Solar commands a share of 20-30% of the Indian solar photovoltaic (PV) installed capacity. First Solar and other American manufacturers have been able to grab a substantial share in the Indian solar PV market as US Export-Import Bank has been among the largest debt financier for solar power projects under the national-level as well as state-level solar power policies.
The Indian government subsequently challenged the American request at WTO but was unsuccessful. US-based industry group Solar Energy Industries Association (SEIA) has also urged the Indian government to remove restrictions on imported solar power equipment.
The only possible solution to this issue seems to be bilateral talks between the US and India, on the line of the EU-China talks. Low-cost funding from development banks like the US Export-Import Bank has been the principal reason for the massive decline in cost of solar power generation in India. Thus, it would be unwise for the Indian government to close the doors to the American manufacturers.
Taiwan and Malaysia may have smaller share in the Indian solar power market, but China is a major trade partner to India. Imposing anti-dumping duties on Chinese solar products may lead to reciprocatory duties on other Indian products, as has been the case in the EU-Chinese trade war. Some Chinese manufacturers are, however, working to circumvent the domestic requirement clause and are planning to set up manufacturing facilities in India.
India is among the leading emerging solar power markets. The solar power generation cost in the country has fallen by around 70% over the last four to five years and the low cost funding (which is often tied with the obligation to use imported modules) from foreign banks has been a major reason for this. Thus, the Indian government must look for a middle path so as to help its domestic manufacturing industry as well as ensure low-cost funding sources to the developers.
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