India’s Ministry of Finance, Department of Revenue officially announced a 25% safeguard duty on solar cells (whether or not assemble in modules) produced in China, Malaysia and other developed countries according to the final suggestion of India’s Directorate General of Trade Remedies. The duty initiates on July 30. Based on India’s Ministry of Finance, the duty will be imposed depending on the values of imported goods. Should there be an anti-dumping duty, this safeguard duty will be imposed the rate before the anti-dumping duty.
In addition, this announcement clarifies that this notification does not apply to the developing countries mentioned in the “No. 19/2916 Notification” released on February 5, 2016”, except for China and Malaysia. Besides China and Malaysia, other developed countries are all listed as imposed countries this time. Whether or not Taiwan, with over 10GW of cell capacity, will be imposed the 25% duty on its cells is still to be uncertain.
India is currently the second largest demanding market in the world for PV modules, and the China local module demand has frozen since China’s “531 notification”. China’s yearly total module demand in 2018 can only achieve 32 – 34GW, allowing India, which can surpass 10GW in yearly demand, to have reached 13% of the global demand this year. As a result, the future trend of India’s trade war has become an influential factor in the global PV industry.
Last year, India’s PV installation came to 10 to 11GW, and this year’s number was originally expected to increase. However, with numerous trade war investigations taking place since last year, India’s module demand in 2018 can decrease to 9 to 11 GW. Looking at module suppliers, China has been India’s largest module supplier, shipping over 9GW of modules to India in 2017, which means taking up around 90% of India’s module imports.
However, so far this year, China’s module export to India has largely decreased due to concerns about trade war. Even during the typical high season of India in Q1, China only shipped 2.4GW of modules and 0.4GW of cells. In addition, the slow progress of India’s projects, resulting in only 3.1GW of module shipped to India from January to May. This is a 33% shrink compared to the same period in 2017, becoming one of a major factor causing an imbalance in the 2018 PV market.
India currently has a module capacity of over 6GW, mainly contributed by Adaini, Vikram, and Warree. For cells, India holds 2.5GW, mainly contributed by Adani, Jupiter, and TATA.The slow progress of projects this year and decreasing imported module prices have stopped local cell makers to expand in capacity.Although Longi has planned to land 1GW of cell and module capacity in India, India’s 10GW yearly module demand still heavily relies on overseas products.
Looking at India and China's overall module cost: most of Indian module makers’ production capacities are not have economic scales like Chinese makers do, also the yield rate and the conversion efficiency of Indian cells and modules are all slightly lower than Chinese current status. Therefore, India's production cost is not low enough compare to Chinese manufacturers.
For China, with the extreme oversupply situation caused by this year’s 531 new policies, China’s entire supply chain has witnessed another dramatic cost-down atmosphere. Wafer prices have plummeted to RMB 2.4-2.55/pc, US$ 0.325/pc for multi-Si wafers; mono-Si went down to RMB 3.15- 3.2/pc, US$ 0.395-0.405/pc. Because India does not develop polysilicon and wafer capacity, the difference of production cost between Indian and Chinese modules happen in the cell and module production segments.
Following the 531 notification, China’s module assembling costs have decreased to only US$ 0.1-0.11/W, pulling the overall cost of top-tier vertical integration manufacturers’ conventional multi-Si modules down to US$ 0.23-0.24/W. After the recommended 25% duty, China’s module costs will still be lower than India’s. As a result, the safeguard duty can protect Indian manufacturers or not is not clear, but will bring negative impacts to India PV project develoment, such as raising the construction costs of PV power plants or reducing the efficency of modules.
In June and July, due to uncertain duty rates at the time and the constantly decreasing module prices, few signs of stocking up to avoid the duty were seen among Chinese manufacturers and India power stations. Judging from the current figures, China shipped 490MW of modules to India in June, a slight increase than May but still not a table-turning swift.
In the future, with the duty being a done deal, China’s module prices for India will continue to decline to remain competitive. For a conventional multi-Si module pricing US$ 0.24/W, the final price will be US$ 0.3/W after the 25% duty, which roughly costs the same as the modules recently produced in India. Several already planned installation projects will inevitably be affected in the second half of 2018, when the uncertainty of duty rates have disappeared. As a result, PV InfoLink has further reduce its projection for India’s demand for this year to 7 – 9GW.
Looking at 2019, to cope with the influence brought by the safeguard duty, the already planned expansion projects in India are likely to progress at faster paces. Further, the duty rate will reduce by 5% on July 30, 2019, so the demand in Q2, 2019 can be quite low. Generally speaking, the demand in the entire first half of 2019 will be in lack of support, will weaker than the second half of 2018.
India’s safeguard duty will more or less affect the installations in India from 2018 to 2019. But considering the fact that the cost of modules has once again decreased this year, India’s demand for modules will be higher than this year, continue moving towards its goal of reaching an installation of 100GW by 2022.