India reaching ~20 GW in solar capacity in 2018 from less than 3 GW in 2014 highlights a trend that has received ample support from Government of India and private players both. Precise and well-timed decisions to build a policy environment, increasing finance choices, and encouragement to entrepreneurs have helped this happen. However, recent investigation on imported textured, tempered glass (used to manufacture solar modules) imported from Malaysia by India’s Directorate General of Anti-Dumping and Allied Duties (DGAD) does not appear as an act favourable towards Indian solar growth.
This is not the first time imported glass (used to manufacture solar modules) has been targeted. In 2017, imported glass from China was considered to be damaging domestic glass industry and therefore, received imposition of anti-dumping duties from $64/metric tonne to $137/metric tonne. And now, imported glass from Malaysia (the second largest glass panel supplier of India) is under the scanner, which could make Indian solar dream pretty costly.
Solar initiatives in India focus towards making green energy at par with cheapest fossil fuel Coal generated energy. It is obviously a smart move to quickly adopt solar within the country. However, in such a scenario where making cost effective decision determine the pace of solar growth and meeting the targets in the country, imposing anti-dumping duties upon imported glass (cheapest and abundant source) seems like a move in opposite direction.
The Comparison and Revelation
India’s current tempered solar glass capacity is not enough to handle rapidly growing domestic manufacturing capacity. And continuously increasing import of tempered glass showcases an innate need to fill up the vacuum to ultimately support Indian solar vision and target.
Table 1: 2016-17 and 2017-18 glass import expense (numbers in Lacs)
Table 1 shows that China, Malaysia, Singapore, Germany and Italy hold top positions in the list of countries that export tempered glass to India. The import expenses rising from FY 16-17 to FY 17-18 (April-Oct) show increase in imports, which indicates rise in demand.
Data shows that in FY 16-17, Malaysia had 3.3% share in India’s import of tempered glass. However, in FY 17-18 (April-Oct), Malaysia’s share increased to 29%. Malaysia’s quick rise to prominence as a trusted and feasible supply source of tempered glass actually creates a door of opportunity for India.
Table 2: 2014-15 and 2015-16 glass import expense (numbers in Lacs)
If compare the data of both Table 1 and Table 2, we see that China had been the top foreign supplier of tempered glass since FY14-15. And now, Malaysia gaining more market share each year will definitely create a competition (between China and Malaysia), crashing cost and allowing cheaper cost for tempered glass to emerge in the market. However, levying anti-dumping duties on Malaysia would remove that opportunity from grasp.
The Way Forward
In recent Union Budget, Government of India reduced GST on solar tempered glass from 5% to 0%. This should be considered as a great help for the domestic tempered glass manufacturing industry to build its capacities. However, until that point when domestic capacities are able enough to handle growing Solar module manufacturing demand and requirements, India should not impose anti-dumping on Malaysia or any other country for tempered glass. Alternatively, the move would risk snatching the option of producing cost effective solar modules out from grasp.
Anti-dumping duties can serve as safeguard against foreign invasion of products that undermine able domestic capacities. For example, India has an enhanced module manufacturing capacity. Therefore, it is important for the country to protect the domestic market from foreign invasion. Also, imposing Anti-dumping duties on modules is very much important (Solar cells should have a lower anti-dumping duty than modules, as India’s cell capacity is insufficient), because it is the finished product and offers the opportunity to maintain quality, performance of in-house projects, and earning from global market (through export), once India is depended on domestic manufacturing.
However, in the case of tempered glass, we have to understand that India is yet to have an ‘able’ domestic glass manufacturing capacity to handle the growing and existing module-manufacturing scenario. Therefore, imposing anti-dumping duties on best suppliers for cheapest imports (of which we do not have sufficient manufacturing capacity) seems to be not a decisive move.
A budding industry that promises growth, prosperity, and independence, has to be protected. Indian solar sector is exactly such an industry. And with only careful considerations and meticulous decision making can the country truly unleash the sector’s full potential and reap the benefits in the future.