Proposed safeguard duty proving to be a big uncertainty for solar sector: ICRA

The Directorate General of Safeguards has recommended provisional safeguard duty of 70 per cent on solar cells and panels in January 2018 and the final decision is still pending. Subsequently, Madras High Court had put a temporary stay on implementation of safeguard duty and the timelines for final decision are also not clear. Also, the fact that recently, the industry association of solar cell manufacturers has withdrawn their earlier petition filed for anti-dumping duty in June 2017 and now wishes to file a fresh petition in April 2018 based on investigation period between April 2016 till December 2017 (based on industry sources), is adding to uncertainty.

Sabyasachi Majumdar, Senior Vice President & Group Head, ICRA Ratings, says, “As a result, uncertainty prevails both over timelines and the quantum of safeguard duty proposed. There is also no clarity on pass-through of such duty under ‘change in law’ provision. In this context, tendering activity for solar projects would continue to be impacted in our view, as also seen in the postponement of solar project bids in Maharashtra and Karnataka recently, and overall subdued trend of solar project awards since June 2017. ”

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