DGTR begins hearing on safeguard duty on solar equipment imports

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SME Times News Bureau | 07 Jul, 2020
In what may substantially increase duty on solar equipment imports, largely from countries such as China, the domestic industry has recommended continuation of 15 per cent safeguard duty (SGD) for another four years with marginal reduction of 0.05 per cent annually.

In their submission to the Director General of Trade Remedies (DGTR) during the course of an oral hearing for extension of SGD, the domestic industry argued that the two-year-long safeguard duty regime was not sufficient and asked the DGTR to extend the duty until 2024 with gradual reduction annually.

If the SGD is extended, it would be double whammy for solar equipment importers in the country as the Power Ministry has stated that 20-25 per cent basic customs duty on solar modules and 15-20 per cent duty on solar cells may be levied from August. If this levy continues with SGD, the total tax component on solar gear imports could come closer to 50 per cent.

During the hearing on Monday, the domestic industry also pushed for inclusion of Thailand and Vietnam under the ambit of the duty, which is imposed to protect the domestic industry from injury. The imports from these countries have also shot up in the last one year or so when equipment from China faced slowdown.

In the hearing organised through video conferencing, the DGTR heard the representations of all the parties, including those who want withdrawal of SGD after its term ends in July, and asked all stakeholders to submit their arguments in writing by July 9 and to submit further rejoinders on July 13. A decision on the continuation of the duty would be taken thereafter.

The safeguard duty was imposed starting from July 30, 2018 for a period of two years to protect the domestic industry against dumping of cheap equipment, especially from countries like China, that commands over 80 per cent of India's market for solar gear. The duty was set at 25 per cent for the first year, followed by a phased down approach for the second year, with the rate reduced by 5 per cent every six months until it ends in July this year.

Earlier, representations were also given by the Solar Power Developers Association and a few from prime exporting countries such as Thailand. Representatives from Thailand were not against SGD but voiced concerns that extension of four year was too long while plan given for annual reduction of 0.05 per cent, too little. It also cited that new countries should not be added under the ambit of the duty.

According to renewable energy consulting and communications firm Mercom, representatives from Malaysia, Indonesia, China, and Taiwan also presented their concerns to the DGTR and asked themselves to be excluded from the duty, citing potential issues with other bilateral agreements with India. They said that if reimposed, the safeguard duty, in addition to the government's proposed basic customs duty (BCD), would result in international trade issues.

The DGTR initiated an investigation in March 2020 to see if there was a need to extend the safeguard duty beyond its deadline following an application filed by the Indian Solar Manufacturers Association (ISMA).