Imposition of Anti-Dumping Duty (ADD) on imports of solar cells and modules not only threatens to jeopardise the 100 GW solar power target that India has set for 2022; it could also hurt job creation and overall economic growth.
Solar energy has emerged as a disruptive force in the last couple of decades, promising affordable power to all. India has big hopes from solar power. The country aims to set up renewable energy capacities to the tune of 175 GW by 2022 of which about 100 GW is planned for solar power alone. Wind, hydel energy and bio-fuel energy make for the remaining 75 GW.
India’s solar energy market has been on an upswing, trying to deliver on the mission. According to ‘India Solar Outlook 2017’, new solar power generation capacity addition for the current year is expected to touch 8.8 GW, a rise of 76 per cent over 2016, making India the third biggest solar equipment market worldwide, overtaking Japan.
The Indian solar energy sector needs to work faster to build on the current installed solar capacity of 13 GW and meet the 100 GW target by 2022. However, the imposition of an Anti-Dumping Duty (ADD) on solar cells and panels could throw a spanner in the wheels.
India’s solar manufacturing capacity is not only limited but also thwarted with challenges of technology obsolescence and fragmented small-scale of operation. India has installed solar manufacturing capacity of around 3GW for solar cells and 7GW for solar modules, while the actual production is only 1GW and 3GW respectively. In contrast, the solar PV power installed in 2016-2017 was about 5.5GW and the target for 2017-2018 is 10GW. Such aggressive targets are being fully matched by India’s solar generation industry, which is growing at an exponential pace. Therefore, nearly 88 per cent of the country’s module requirement is met through imports.
The demand of time, in such a scenario, is not to curb imports or make them onerous with the imposition of ADD contrary to the demands of a miniscule percentage of the domestic manufacturers of solar components. ADD will only result in increasing the solar power tariff in the range of Rs 3.50 to Rs 4/unit, a price Discoms would be unwilling to pay. Further, at that rate, India would be able to set up only 30GW of solar plants by 2022.
The past few years have shown that the solar manufacturing industry has grown almost three-times since 2014 sans imposition of ADD. This establishes that the answer to the tardy growth of India’s solar manufacturing sector lies not in the imposition of ADD but continuing, even maybe increased, support of the Government to ensure that it develops competitively into a fully vertically integrated, state-of-the-art manufacturing facility equipped to meet the demands of the Indian generation industry. The government is offering incentives such as capital subsidy, operating cost subsidy and export incentives for domestic module manufacturers. The government should consider providing low interest rate loans and low-cost power to the solar manufacturers so they can compete internationally.
A big concern that advocates of ADD on solar equipment have chosen to ignore is the loss of employment opportunities. Imposition of ADD threatens to throw many out of employment as each MW of solar power generation capacity currently creates employment for one person.
The solar sector creates a host of opportunities —from blue-collared workers such as longshoremen who load and unload solar panel cargos to pilots and crew who transport equipment, truckers, wholesalers, retailers, inventory managers? and also, of course, scores of people involved in solar R&D. The solar power plant installation and maintenance market alone generates large-scale employment.
More importantly, solar energy creates jobs in regions where there are hardly any. Solar power plants are set in areas that receive high solar radiation, usually barren or largely unproductive land parcels. The employment potential of these areas is, therefore, extremely low. Solar plants create huge employment opportunities in these regions.
Additionally, access to affordable power in remote areas propels the local economy to generate more employment in small and medium enterprises (SMEs). With low cost solar power, India can build dedicated distributed solar power generation projects for agriculture feeders and eliminate the heavy and annually increasing subsidies doled out to the agriculture sector for power. Low cost solar power can help India achieve complete electrification sooner than the December 31, 2018 deadline and eliminate health hazards for people burning kerosene, eliminating long term subsidies for kerosene.
Affordable solar power will also improve the financial health of Discoms as it gives them the option to transition exclusively to paying customers.
India needs access to affordable solar power to prosper. It can fuel the progress of power intensive industries such as steel, cement, and aluminum by making them competitive. The prosperity of these industries will create more job opportunities. However, it will only be possible if solar power tariffs continue to remain low and the solar generation industry continues to grow at a consistent pace.
The need of the hour is a sector-specific manufacturing policy that boosts local manufacturing encouraging it to grow into a globally competitive and state-of-the-art industry, not one that restricts vital imports and impedes India’s phenomenal growth in the solar sector. ADD will only result in pulling back the solar sector in India, which will be counterproductive for Indian manufacturing.
(The writer is founder-partner, DGS Associates law firm and head, Trade Laws Practice)