Continuation of safeguard duties on imports from China for third consecutive year creates confusion

The government’s decision to continue the imposition of safeguard duties for a third consecutive year on imports from China has been met with confusion from the industry, while experts have said that it might not have much of an effect in the short-term.

“The solar industry has been recommending to the government to levy a basic customs duty (BCD) on imports of solar cells and modules as it will give support and direction to the domestic manufacturers for the next four to five years, and they can expand accordingly,” Saibaba Vutukuri, CEO of Kolkata-based manufacturer Vikram Solar told ET.

On Wednesday, the Ministry of Finance issued a notice that would continue a duty of 14.9 per cent to be levied on Chinese imports for six months from July 30, 2020 to January 28, 2021, while the duty will be slightly lesser at 14.5 per cent in the following six months. As per the World Trade Organisation’s (WTO) safeguard measures, such a safeguard duty can only be applied for a maximum period of four years to protect the domestic industry, but it has to be progressively lowered.

Last month, union power and renewable energy minister R.K. Singh Power told stakeholders that a basic customs duty (BCD) of 15-20 per cent on solar equipment would be imposed from August, which would double in a year’s time. This duty was supposed to replace the safeguard duty, but now it seems likely that both would be charged for the coming 12 months. An official announcement on the basic customs duty is expected soon, which would not violate any WTO rules.

However, experts don’t think that a year’s extension on safeguard duties will do much to boost domestic manufacturing in the short term. Per industry estimates, indigenous production of solar cells and modules will initially cost about 20 per cent more than Chinese imports.

80 per cent of solar imports used in India are imported from China. The rest are sourced from Thailand and Malaysia, which are mostly comprised of Chinese-origin companies. Due to the ASEAN Free Trade Agreement, the basic customs duty cannot be levied on these countries, but they cannot keep up with India’s requirements in the short-term.

Show More

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button