The Indian Government is planning to impose a 25 percent safeguard duty on imported solar cells from Malaysia and China as a safety measure for its domestic manufacturers.
India's Directorate General of Trade Remedies (DGTR) said that the imported solar cells from these two neighboring countries have caused adverse effects to the local manufacturers of India.
"Imposition of safeguard duty, in this case, would be in public interest because it will prevent complete erosion of manufacturing base of solar industry in the country," according to the DGTR in its proposed plan.
Stated also in its proposed plan is that the tariff on imported solar cells will decrease to 20 percent during the first half of the second year. A 15 percent decrease in the second half.
This action of the DGTR was prompted by complaints of Indian solar cell manufacturers. They expressed their sentiments that imported solar cells from China are hurting the domestic manufacturers. The Chinese producers, on the other hand, said that the Chinese imports are helping India to hasten its program of adopting renewable energy.
"Solar module manufacturers are facing tough and unhealthy competition from imported modules," according to the North India Module Manufacturer Association.
Meanwhile, if the proposed plan of the DGTR gets approved, the solar cells from Malaysia and China will get more expensive. Currently, China and Malaysia provide more than 80 percent of the demand in India for renewable energy components such as the solar cells.
Some experts have apprehension, however, on the proposed plan. India's consultation firm KPMG Head of Infrastructure Strategy and Operations Anish De said that the plan for the higher tariff on imported solar cells from China and Malaysia is reasonable as long the locally manufactured solar cells are at par with the quality that these imported solar cells from China and Malaysia have.
"As long as that is possible, the safeguard duty would be justified. The hope is that soon the domestic industry will scale-up and bring down the cost differential," said De.
China Chamber of Commerce for Import and Export Secretary-General Zhang Sen also said that the proposed plan, if approved, will hurt both Indian consumers and Chinese manufacturers.
India's tariffs on solar cells have recorded a low of 2.44 Indian Rupees earlier this month. The tariffs can increase to 3.1 Indian Rupees and generators will deliver such news to other power retailer companies.
