DGTR starts hearing domestic industry plea on safeguard duty extension on solar imports
DGTR conducted a hearing via video conferencing on Monday to investigate the domestic industry plea for continuity of safeguard duty till 2024 on solar equipment imports.
Citing potential problems, representatives from neighboring countries stated that, international trade issues could crop up if the re-imposition of the safeguard duty is considered in addition to the basic customs duty (BCD) proposed by the government.
With the 2 year period of imposition of safeguard duty on solar imports is coming to an end on July 29, 2020. This was imposed to protect the domestic industry against the dumping of cheap equipment, particularly in countries such as China which control more than 80% of the Indian market for solar gear.
During the oral hearing for the extension of SGD, the Domestic Industry proposed to the Director-General for Trade Remedies (DGTR) that the two-year safeguard duty regime was not enough and requested DGTR to prolong the duty until 2024, with a gradual annual reduction.
The DGTR launched an investigation in March 2020 on whether an application filed by the Indian Solar Manufacturers Association (ISMA) needed to raise the security fee beyond its deadline.
Domestic Industry Proposal
The domestic industry proposed a continuity of 15% safeguard duty (SGD), for a further four years with a marginal reduction of 0.05 percent annually.
During the hearing held on Monday, Thailand and Vietnam were also pushed for inclusion under the ambit of duties, by the domestic industry.
It was argued that the inclusion of Thailand and Vietnam will protect the domestic industry from injury. Domestic industry cited reasons that imports from these countries have also increased over the last year or so when equipment imports from China were slowed down.
Stakeholders Arguments
At the hearing, conducted via video conferencing, the DGTR heard representations from all parties, including those who wish to withdraw SGD after its term ends in July, and asked all stakeholders to submit their arguments in writing by July 9 and on July 13 to submit further rejoinders. A decision would later be taken on the continuation of the duty.
The Solar Power Developers Association and several other major exporting countries, such as Thailand, also gave representations earlier. Thailand representatives were not against the SGD but expressed concern that a four-year extension was too long and that the plan for a 0.05 percent annual reduction was too little. It also cited that no new countries should be added under the ambit of the duty.
Representatives from Malaysia, Indonesia, China, and Taiwan also raised their concerns with the DGTR and asked for their exclusion from the duties, citing potential problems from other bilateral agreements with India.
They also stated that international trade issues could crop up if the re-imposition of the safeguard duty is considered in addition to the basic customs duty (BCD) proposed by the government.
Double Blow to Importers
As the Ministry of Power has stated that 20-25 percent basic customs duty on solar modules and 15-20 percent duty on solar cells can be levied from August 1, 2020.
Thus, if safeguard duty is extended, it would be a double blow for solar equipment importers in the country. With both BCD and SGD the total tax component on solar gear imports could be close to 50 percent
