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The dark side of India’s solar gamble

Almost 75% of India’s solar power capacity is built on Chinese solar cells and modules.

  • A steep tariff wall is set to be erected on solar module imports. But there is another, more effective path ahead
  • While it is sound, in principle, to extend protection in return for performance, setting up suitable performance criteria and choosing relevant time horizons for its delivery is not easy

SINGAPORE/CHENNAI : In December, news reports indicated that the ministry of new and renewable energy had proposed a 20% basic customs duty (BCD) on solar module and cell imports. Fast forward three months, that has gone up to a proposed duty of 40% on solar photo-voltaic (PV) modules and 25% on solar photo-voltaic cells from April 2022. There is an existing safeguard duty which was first imposed in 2018. That is expiring in July.

One of the usual objections, i.e. that India’s duties can be contested in the World Trade Organisation (WTO), is easily addressed. WTO takes a long time to adjudicate. The judgements can be appealed. Both the Trump and the Biden administrations in the US have refused to appoint appellate judges to the WTO. Of course, the flip side is that it means that India’s import duties can be met with export duties on the part of China.

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