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Orissa High Court Issues Temporary Stay on Levy of Safeguard Duty on Solar Imports

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BENGALURU: The Orissa High Court has stayed the imposition of safeguard duty on imported solar panels until August 20 following a petition from leading solar developer Acme Solar Holdings opposing it.

Last week, the Directorate General of Trade Restrictions (DGTR) recommended that safeguard duty on solar panels and modules imported from China and Malaysia should be imposed for two years — 25% for the first year, 20% for the first six months of the second year, and 15% for the remaining six months.

The DGTR noted that this was a fit case for safeguard duty because imports, which had spiked sharply since 2014-15, were causing “serious injury” to domestic solar equipment production. “(There has been) a significant increase in imports, (following which) domestic industry’s share of total sales of solar panels and modules has fallen from 10% of the total in 2014-15 to 4% in 2015-16 to 8% in 2016-17 and 7% in 2017-18 (up to September 2017),” its report recommending the duty, said.

Acme declined to comment on the matter. “There are serious errors in the DGTR judgment. Its main argument that excessive imports are causing major injury to the domestic industry is not correct,” said a source close to the development.

The DGTR’s recommendation had said that the impact of the duty would be passed on to the discoms which bought power from the developers. But the source noted that if developers of already sanctioned solar projects increased their tariffs in response, there was no guarantee that state power regulators and state discoms would agree to paying more.

“The report says that such projects will not be affected but there is no guarantee from the state discoms yet that they will bear the extra cost,” said the source. “Only recent tenders of SECI (Solar Energy Corporation of India) and NTPC have provided clarity on the pass-through mechanism.”

“There is no guarantee that the state regulatory commissions will agree to bear the impact of the duty. Acme getting a stay order is good for developers,” said another industry source.

Solar power tariffs are currently around Rs 2.75 per unit, which is on par with conventional energy, but with the imposition of safeguard duty, they are bound to rise.

The DGTR’s decision followed a petition from the Indian Solar Manufacturers Association (ISMA), a body of domestic solar manufacturers, filed last December. In a preliminary finding in January this year, a safeguard duty of 70% for 200 days on solar imports had been recommended.

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