Climate change is a global threat to mankind caused by anthropogenic carbon dioxide emissions from burning of fossil fuels. At the same time, the economic development across the world is fuelled by energy, and it will continue to do so in the future. To continue the reliance on energy and to reduce carbon emissions at same time, in most regions the world will have to move to renewable sources of energy like solar and wind. Fortunately, solar and wind resources are available in abundance in most regions but the technology to capture it through windmills and solar panels is concentrated in certain countries only. To take advantage of this booming industry, countries like China created huge manufacturing facilities. At the same time countries like India, the US but also Europe and other countries are coming up with various measures to promote domestic manufacturing and protect their strategic interest in this sector. The solar team of GIZ India has carried out a short analysis on the global scenario for duties on solar panels and cells. The analysis provides insights into the strategies of different countries and may give indications for the future of trade and manufacturing. Various types of duties imposed are listed in table 1: 

Table 1: Type of Duties

Different countries have strengthened their domestic manufacturing by imposing duties on the imported products over the years, and have modified as per the scenario. A brief representation of the import duty timeline by different countries like India, USA and Europe has been shown in the figures 1 to 3. 

India has also taken steps over the years to support its solar domestic manufacturing. It imposed its first safeguard duty on the solar PV cells and modules in 2017 which was later put on hold by the court. In 2018, it implemented a safeguard duty for a period of 2 years on the import of solar PV cells and modules from countries like China, Malaysia and Taiwan. Recently, the Government of India has decided to replace its safeguard duty with the basic custom duty starting from April 2022, in order to boost domestic manufacturing by making the imported products costlier.

The USA and Europe have imposed anti-dumping duties as well as countervailing duties on imports to nullify the subsidy & dumping of Chinese solar cells and modules. This led to a decrease in the share of imported modules in the market, but after a while, it was observed that the share of modules imported from Taiwan and Malaysia started increasing and it led to extending the duties to these countries as well. While the US authority announced safeguard duty for a period of 4 years and imposed additional import duty on Chinese PV cells and modules, the European Commission negotiated to exempt the Chinese products from the duties on the condition of selling them above the minimum import price (MIP). However, for achieving the EU climate change objective the trade measures were ruled out to increase the penetration of cheap imported modules in the market to upscale the solar PV deployment. 

Similar to Europe, Brazil has announced to remove the import duty on certain types of modules, inverters and trackers in order to reduce the revenue loss to the state. Turkey has shifted to a new formula for calculating import duty on solar PV modules. In April 2020, it had announced to consider kilograms as a measurable unit for calculating import duty instead of per square meter. The adoption of new formulas can be related to the increase in weight of the higher efficiency modules. It has been found that there is a difference of around 3 kg weight in the higher efficiency modules, and the new formula is expected to be more effective in discouraging the import of solar modules. Based on the overview done for different countries, a comprehensive representation of the current import duty applicable on Solar PV module & cells by different countries has been prepared and represented in table 2.
 

Table 2: Import Duty on Solar PV Cells & Modules.

Countries like Brazil and Europe are shifting away or have already removed the duties on solar PV products majorly on modules and cells. It is feared that changing trade measures bring uncertainty among the developers and would finally result in a reduction in the pace of solar PV deployment. Many countries seem to be convinced that protective measures are not the optimal long term solution for domestic manufacturing to grow and may only lead to trade conflicts. Amongst other measures, China has been able to reduce its prices due to the supportive subsidies that were being made available for the manufacturers. It has been found most effective to provide supportive subsidies to the domestic manufacturers to become competitive. As Europe, which is kickstarting new PV manufacturing capacities, measures to protect themselves from imports seem not to be further pursued. 

For more information please contact Mr. Abhinav Jain, abhinav.jain(at)giz.de.