Last month, the DGS had recommended safeguard duty to be imposed for a period of 200 days in order to control imports of solar cells and panels and give a fillip to domestic manufacturers
Though the Directorate General of Safeguards (DGS) has proposed imposition of duty on solar imports, whether it will really be levied is uncertain says a report by Icra.
Last month, the DGS had recommended safeguard duty to be imposed for a period of 200 days in order to control imports of solar cells and panels and give a fillip to domestic manufacturers. However, a final decision is yet to be taken on the same.
The preliminary finding on the subject has been submitted to the standing Board under the commerce secretary.
According to Icra, Madras High Court had put a temporary stay on implementation of safeguard duty and the timeline for the final decision is also not clear. Also, the fact that recently the industry association of solar cell manufacturers withdrew their earlier petition filed for anti-dumping duty in June 2017 and now plans to file a fresh petition is only adding to uncertainty.
“As a result, uncertainty prevails both over the timeline and the quantum of safeguard duty proposed. There is also no clarity on pass-through of such duty under ‘change in law’ provision. In this context, tendering activity for solar projects would continue to be impacted in our view, as also seen in the postponement of solar project bids in Maharashtra and Karnataka recently, and overall subdued trend of solar project awards since June 2017,” said Sabyasachi Majumdar, senior vice president & group head, Icra Ratings.
An earlier Crisil report had mentioned that imposition of safeguard duty of even 70% will put 3 gigawatt of solar projects at risk, apart from raising project costs by 25%, cranking up tariffs and deterring distribution companies.
In 2017, around 4 gw of solar projects were auctioned and these would be under implementation now. Typically, orders for modules are placed with a lead time of one year. These projects were auctioned at low tariffs, so any rise in equipment cost after the safeguard duty would crimp the cushion that developers have to service debt.
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 "Solar power")
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