China Need Not Fear Tariff Barriers in India

Chinese solar module makers should not fear India tariff or trade barriers that could restrict or affect exports to the fast-growing market.

Chinese manufacturers slowed marketing efforts in India due to the growing wave of module import opposition in the U.S., fearing that the Indian government would also impose import duties. 

India’s Ministry of New and Renewable Energy (MNRE) has gone on record to say that it has no plans to impose tariff barriers against Chinese products. MNRE seems to be just about happy with one clause in its national solar mission policy, which stipulates that projects adopting crystalline module technology will have to import these modules from the local markets. The MNRE mission policy made an exception for solar thermal technologies and equipment earlier. And, now, it has made an exception for thin-film modules as well.

Elsewhere within India, various state governments, including the key western states of Gujarat and Rajasthan, have allowed project developers to import technologies and equipment at almost zero percent duties. 

There are various reasons why the Indian government would not impose barriers:

• India generally refrains from imposing anti-dumping duties on products being imported from any particular country. It is only in case of food-grains that the Indian government generally takes such steps.

• The government would rather have prices go down considerably, rather than extend its commitments in subsidizing solar power projects. The recent bids for on-grid solar projects have substantially reduced the subsidy burden. 

• The Indian government is quite keen to promote solar power generation and reduce its dependence on fossil fuels, particularly if it must enable the industry to become more productive. Power shortage is a major bane for the manufacturing sector, which either shuts down or uses other expensive and polluting fossil fuels. This is a large captive market that will soon open. 

• Power shortage is a much bigger issue for the government, rather than supporting India’s module manufacturer’s business.

The federal (central) as well as the key states of India have already demonstrated that they are serious about promoting and expanding the solar market. Tariff barriers will only prove to be counter-productive. 

If the U.S. imposes trade barriers, China can focus on the Indian market where the hunger for power is huge and continuously growing.