It has been announced that India would levy a basic customs duty on import of solar cells and modules to further restrict imports and encourage domestic manufacturing. This is not a new development; in fact, a similar proposition earlier had led to a World Trade Organisation (WTO) case against the country.
The Covid-19 pandemic has brought with itself a rising consciousness for locally-produced products, espoused in the new government mantra of Atmanirbhar Bharat. However, to compete with an established solar giant like China, India would need to provide more than just imposition of duties.
Under our forthcoming research, part of the ‘IDFC-ICRIER Project on Global Competitiveness of Indian Economy’, we found that the value of import for solar cells/photovoltaic cells has been rapidly falling. From a peak value in 2017-18, the current value of imports stands at just $128.8 million for April-July 2020.
This was perhaps a result of the extension of previously imposed safeguard duty, in view of the pandemic and import restrictions. The solar sector albeit is an industry that relied heavily on imports, and such a drastic fall could prove to be detrimental for the sector.