Import of cheaper solar modules on rise as China exploits loopholes
Indian solar panel manufacturers are grappling with the influx of cheaper Chinese imports funnelled through intermediary countries such as Vietnam, Malaysia, and Singapore as Chinese companies exploit Free Trade Agreement (FTA) loopholes to export to India.
Despite New Delhi's imposition of a 40% customs duty on solar modules and 25% on solar cells in April 2022 to boost domestic production and reduce Chinese imports, companies in China are finding ways to bypass these high tariffs and continue supplies to Indian solar farm developers.
The Chinese companies have effectively utilised this strategy in the past to evade local tariffs, as demonstrated by a year-long investigation in August 2023 by US federal authorities, which revealed that five Chinese solar panel firms had circumvented tariff regulations by channelling their operations through countries such as Cambodia, Malaysia, Thailand, and Vietnam.
Following the imposition of tariffs, direct Chinese exports to India have declined, but from April to August 2023, imports of solar panel modules from Vietnam and Malaysia have surged, accounting for 60% of all such imports into India, with majority of these products originating from Chinese companies.
Indian manufacturers say the imports are hurting domestic industry as the Chinese firms are resorting to dumping their products by misusing the FTA route.
