Barrier-free Trade: Solar imports from China seen surging in FY22 – The Financial Express

Clipped from: https://www.financialexpress.com/economy/solar-imports-from-china-seen-surging-in-fy22/2239995/

The pace of solar capacity addition slowed 45% annually to 4.8 GW in April-January FY21.

Import of solar cells and modules had dropped 75% on year to $392.8 million in April-January FY21.

Come August, import of solar modules and cells might witness a sudden surge, thanks to the opening of an eight-month barrier-free window. The bulk of the imports are likely to be from China, given the pricing power being enjoyed by exporters from the neighbouring country.

A 15% safeguard duty on solar imports from China and Malaysia — the only import barrier in the absence of any other duty, including the basic customs duty (BCD) — will cease to exist on July 31. Solar module and cell imports will attract BCD of 40% and 25%, respectively, effective FY23.

Import of solar cells and modules had dropped 75% on year to $392.8 million in April-January FY21.

“There are around 20 giga-watt (GW) of solar projects under implementation and another 5 GW for which bids are to be invited. Considering the BCD on modules and cells will kick in from April 2022 there will be a rush to import modules before that date,” Debashish Mishra, leader of energy, resources and industrial products at Deloitte India said.

The industry will, however, pencil in the potential cost benefit offered by imported products as currently prices are on the rise in China. “There has been a situation of panic buying in the Indian market due to which Chinese companies are increasing prices,” Naveen Arora, assistant vice president of procurement at Petrnonas-backed Amplus Solar, said.

Thanks to cheaper rates of imported modules, especially from China, solar capacity addition in the country is mostly done through imports. Module costs comprise about 60% of the total project expenditure for solar plants. “Currently, even with the safeguard duty, domestic module costs are higher than the delivered price of comparable imported modules,” Pinaki Bhattacharyya, CEO of Amp Energy India, told FE, adding that “With the expiry of the safeguard duty, if the base prices of cells remains the same in India and overseas, we expect imported modules to cost around 5-6% lower than Indian modules”.

The pace of solar capacity addition slowed 45% annually to 4.8 GW in April-January FY21. “The domestic modules are currently priced between 29-30 cents per watt-peak (c/wp) right now whereas rates for imported modules currently range between 23-24 c/wp and will likely see a 1 c/wp increase in Q3 and Q4 FY22, bringing the price to 24-25 c/wp,” Azure Power said in an emailed response to FE.

Apart from price volatility, there are certain other which also make it difficult for Indian developers to place concrete orders with Chinese suppliers to take advantage of duty-free imports. The industry is keeping a close watch on how the second Covid wave is panning out and its potential implications on supply chain and project implementation timelines.

Also, no foreign module manufacturers are currently in the approved list of models and manufacturers (ALMM) which was recently published by the government. All projects bid out after April 10 under central government schemes will have to use solar equipment from ALMM listed entities. Lack of clarity on the possible extension of the safeguard duty period is also adding to uncertainties.

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