Subsidies to “neutralize” the effects of Solar Anti-Dumping Duties proposed

MNRE, Solar, Solar PV / By

Smt. Nirmala Sitharaman, Ministry of Commerce & Industry, informed Rajya Sabha that the anti-dumping duties collected from the importers could be recycled back into the system in the form of additional subsidies to the project developers to negate the impact of Anti-dumping Duties(ADD). It is in a way reimbursing the additional cost incurred by developers while importing PV modules from the countries being investigated. 
Part of the Minister’s statement is as follows ” “The recommended anti-dumping duties, if imposed, may lead to some increase in the capital cost for the solar power developers. However, the collected anti-dumping duties can be placed in the hands of MNRE to provide additional subsidy to neutralize the additional capital cost of the solar power developers. Further, the National Clean Energy Fund, which is intended to develop clean energy in the country, can also be uitlised to provide subsidies to projects which may be affected by the anti-dumping duties. “
(The full text is available here).
While I am not a legal expert, prima facie it appears that if this proposal is implemented in full force, foreign module companies  and project developers using imported modules stand to gain at the cost of the domestic manufacturers.
However, the extent of the impact will depend on a few factors.

  1. What is the quantum of additional subsidy will be provided to the developers? – The proposed anti-dumping duties are in a wide range of US $0.11/Wp to US $0.81/Wp. (The ADD proposed per Wp are $0.11 for First Solar, $0.48 for other US manufacturers, $0.59 for Taiwan origin, $0.62 for Malaysian origin modules, $0.64 for Canadian Solar, and $0.81 for all Chinese origin modules).If the government decides to provide additional subsidies of upto the median ADD(About $0.60 in this case), then developers who import modules from USA and Taiwan will be compensated, but Chinese and Malaysian modules will lose out. Please note that this is only an example to illustrate how the quantum of subsidy will impact the various stakeholders. (On a related note, even though the petitioners want retrospective ADD  to cover the period(2012-13) under consideration, the DGAD report is silent on the topic).
  2. The second point we need to know is, how much money from the National Clean Energy Fund(NCEF) will be allotted, and for what MW capacity. It is estimated that the NCEF has about Rs. 8700 Crore(Approximately US $ 1.4 Billion) in its kitty at the end of 2013, and another Rs. 5,200 Crores(US $0.83 Billion) is expected to be added in 2014.
  3. Third – What will be the duration of support? ADDs are valid for 5 years from the date of imposition of the duty(More here). Will the subsidy be available for the entire duration of 5 years? Or will there be a MW cap?
This additional subsidy will obviously help developers, and to certain extent the foreign module suppliers(because the anti-dumping duties that is paid by the developer will in effect be reimbursed to the developer in the form of subsidy, thereby neutralizing the higher cost of foreign modules). It will also help domestic developers, provided the amount of subsidy is restricted to a certain level.
To conclude, while this move will definitely benefit the developers and the foreign module suppliers, the extent of the impact will be known only after there is clarity on the quantum of the subsidy, and the timeframe of the subsidy proposed.
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