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India may back solar duties after probe says US, China dumped

LiveMint logoLiveMint 14-05-2014 Natalie Obiko Pearson

New York: India may recommend duties on US and Chinese solar imports after finding evidence of dumping, broadening a global trade dispute in the $130 billion market.

More than 20 overseas suppliers, including First Solar Inc and Yingli Green Energy Holding Co, sold equipment in India for as little as half the cost as in their home markets and undercut local prices by as much as a third, according to a summary of a 1 1/2 year probe by the ministry of commerce & industry sent to the parties involved on Tuesday and obtained by Bloomberg News.

The document indicates the ministry will recommend duties on imports from the US, China, Taiwan and Malaysia, said Jagdish Agarwal, spokesman for the Solar Independent Power Producers Association, which opposes tariffs.

If Asia’s third-biggest solar market imposes duties, it would escalate a protectionist trend that’s threatening the viability of projects as they compete against conventional power sources. The US applied tariffs as high as 250% on Chinese products in 2012, and the European Union followed with its own measures a year later. Australia on Wednesday announced a dumping probe.

India, which had virtually no solar power in 2010, has built $10 billion of projects and driven down the cost of generation by half, making it cheaper today than grid power in Delhi and Mumbai. Tariffs will derail that trajectory, making solar power more expensive and causing projects to fail, said Vinay Rustagi, joint managing director of Bridge to India Energy Pvt., a New Delhi-based consulting company.

‘Wafer-thin margins’

It will make most large-scale projects, currently developed on wafer-thin margins, unviable, Rustagi said. Developers, who depend on imports for 90% of panels, could back out of projects, government programs may be scrapped, and India could set itself back two years on its goal to make solar competitive with conventional power, he said.

Tuesday’s document was the first indication of which side India’s government is favoring since the start of the probe in November 2012. The dispute pits local panel and cell makers against project developers and overseas manufacturers.

We disagree that we have dumped imports, Tempe, Arizona-based First Solar, the largest US panel-maker, said in an e-mailed statement. The preliminary decision by the Indian authorities, if upheld, would make serving the Indian market very difficult.

The ministry has until 22 May to decide whether to impose duties before the case expires. Any tariffs it proposes could take six months to implement and may be scrapped by a new government, said Bridge to India’s Rustagi.

Results in national elections will be announced in two days. Narendra Modi, the frontrunner who pioneered India’s first incentives for large-scale solar power, has called for a clean- energy revolution during the campaign.

Inferior quality

The document upheld many of the arguments submitted by domestic makers Indosolar Ltd., Websol Energy System Ltd and Jupiter Solar Power Ltd, concluding that the domestic industry suffered material injury due to dumped imports.

The ministry dismissed arguments by the opposing side that Indian products are inferior in quality. Opponents including China Sunergy Co, Canadian Solar Inc, JA Solar Holdings Co. cited World Trade Organization rules, which say an anti-dumping probe can’t be initiated if the producers supporting the application account for less than 25% of national production. Indosolar, Websol and Jupiter account for just 12% of production, according to the opponents’ submissions.

Project dropped

The value of photovoltaic imports into India has reached $2.4 billion since 2010 when the nation started its solar program, according to commerce ministry data. Domestic manufacturers benefited little from that growth, idling 70% of their production capacity after losing orders to foreign competitors.

Duties won’t create globally competitive Indian manufacturers because they can’t match the scale of Chinese rivals, according to Bridge to India. BlackRock Inc-backed SunEdison Inc dropped a project in India last month on doubts that local producers can meet demand.

The annual production capacity of China’s Yingli, the world’s biggest panelmaker, dwarfs the largest Indian maker by 10 times, according to data compiled by Bloomberg. If India imposes tariffs, developers would probably look to Singapore and South Korean suppliers instead, said Jenny Chase, head of solar analysis for Bloomberg New Energy Finance in Zurich.

Parties involved in India’s anti-dumping probe have until 16 May to respond to the document.

Yingli spokeswoman Qing Miao wasn’t available when called at her office and didn’t respond to an e-mail requesting comment. JA Solar Holdings Co. and Canadian Solar Inc., also among the biggest Chinese exporters to India, didn’t respond to inquiries.

Commerce secretary Rajeev Kher and D.P. Mohapatra, a director in the ministry who signed the document, didn’t respond to e-mails and phone calls seeking comment. BLOOMBERG

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