Solar glass anti-dumping duty sparks project delay fears amid module price rise

New Delhi: The imposition of anti-dumping duty on solar glass last month has led to a rise in solar photovoltaic (PV) module prices by 10-12%, raising concerns over project cost escalations and potential delays, industry participants said.

The solar glass duty, largely aimed at supplies from China, has also led to supply constraints that could delay projects critical to India’s goal of achieving 500 GW of non-fossil power generation capacity by 2030.

“Solar PV module constitute about 60% of the project cost. Because of this anti-dumping duty there has been an increase of close to 12% in the solar PV module cost. This means overall solar project cost goes up by 7-8% and all the IRR (internal rate of return) the module makers had calculated,  goes for a toss,” said an executive with a domestic solar module manufacturer, on condition of anonymity. The executive said a few local solar glass makers have also resorted to price hikes.

In a bid to reduce imports and boost domestic manufacturing, the union ministry of finance last month imposed a provisional anti-dumping duty on textured, tempered, coated and uncoated solar glass imports from China in the range of $673-677 per tonne and $565 per tonne for imports from Vietnam.

According to the ministry of new and renewable energy, as of 30 June, the total solar photovoltaic (PV) module manufacturing capacity in the country is 85.47 GW. However, the country does not have considerable solar glass production capacity and is dependent on imports. The domestic solar glass manufacturing capacity stands at 10-12 GW.

Queries mailed to the union ministry of new and renewable energy remained unanswered till press time.

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Strain on industry

“Solar glass is a critical component in solar module manufacturing, constituting about 8% of total module costs, with each module containing approximately 20 kg of solar glass,” said Prashant Choubey, director at Avaada Electro. “The imposition of these duties has significantly increased the effective price of imported solar glass, creating a financial strain on the industry.”

“While we appreciate the intent to promote domestic manufacturing under the ‘Make in India’ initiative, there are practical challenges,” he said.

The duty has increased module costs, which would be a burden on the power developers as well as the cost gets passed on by the manufacturers, he added.

This cost, if passed, may also result in an increase in tariffs, said industry players. The hike in module cost raises the risk of tariff revisions under the “change in law” clause of the Electricity Act, potentially delaying project timelines, Choubey noted. 

This increase in cost and a likely delay in supplies and eventually in project implementation gains significance as the government and the industry are making efforts to meet the target of 500 GW non-fossil capacity by 2030.

However, completion of green power projects has gained momentum in the current financial year as renewable energy projects—solar, wind, small hydro—added 14.9 GW in April-November, nearly double the 7.53 GW green capacity added a year ago. India’s overall power generation capacity currently is 456.75 GW, of which 213.7 GW is non-fossil capacity, which includes 158.55 GW of solar power. 

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Ill-timed?

Although stakeholders agree that the move is aimed at developing the local manufacturing ecosystem, they believe the duty should have been imposed with a time lag, allowing the industry to grow and prepare for the increased cost and impact on supplies.

“Anti-dumping duties are a step in the direction of overall march towards diversifying and indigenising parts of the supply chain,” said Amit Paithankar, chief executive officer, Waaree Energies Ltd. 

“Ensuring the balanced availability of various components while imposing anti-dumping duty will ensure that overall renewable objectives of the nation are fulfilled; timing of these measures is hence, very important.”

The Centre has taken several steps, including tariff and non-tariff barriers, to reduce solar equipment imports, which largely come from China. The implementation of these barriers gained momentum after the diplomatic spat between the two countries and the Doklam dispute in 2020.

These measures include increased customs duty on solar modules and cells and the implementation of the Approved List of Models and Manufacturers (ALMM), wherein module-makers were allowed to supply to government-backed projects and utility-scale projects. The government recently announced to have a separate list for cells.

“In a phased effort to achieve self-sufficiency in the solar energy sector, the government has taken steps to protect not only module production but also ancillary industries,” Saurabh Agarwal, tax partner, EY India said. “After increasing the import duty on solar modules from 0% to 44% back in April 2022 and imposition of ALMM restrictions, which spurred domestic capacity expansion, attention has now turned to safeguarding the production of key components like glass and aluminium frames used in solar modules.”

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Noting that the duty has been imposed to protect the domestic industry from imports at very low prices and make the domestic industry self-reliant, Agarwal said: “At the same time it may be noted that imposition of anti-dumping duty should not affect the availability of the solar glass.” He expects prices to ease as localization gains pace and domestic glass industry scales up .

“Similar trends have also been seen in the past when localization was done in other sectors such as mobile phones, auto industry and white goods. From a long-term perspective, imposition of such duties should not impact the goal of the Indian government achieving a capacity of 500 GW by 2030,” he said.

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