Safeguard Duty Fails To Protect

It has been a year since a safeguard duty was imposed on imported solar panels, but the move has not helped. The purpose of the duty was to promote domestic manufacturing and reduce imports. The safeguard duty was of 25 per cent in the first year, then 20 per cent for six months and 15 per cent for another six months for solar panels sourced from China and Malaysia. But 88 per cent panels are still imported from Thailand and Vietnam.

One of the issues is that a timeframe of two years is inadequate to set up manufacturing capacity. Second, since January, regulators have allowed safeguard duties to be considered as 'change in law' and allowed to pass on the cost to consumers. Further, solar tariffs have increased, but domestic manufacturers are still seen as 'expensive'. Also, lenders to existing players such as Moser Baer and Indo Solar have moved the National Company Law Tribunal (NCLT), thus cutting down domestic manufacturing capacity. The government should look back and see who they are protecting with this duty.