On 23 November, the Indian Ministry of Commerce and Industry officially launched an anti-dumping investigation concerning PV modules, both c-Si and thin film, manufactured in China, Taiwan, Malaysia and the United States. The investigation was initiated based on complaints from domestic manufacturers, citing the pricing of imported modules within project bids (under state and national incentive schemes).
Unlike other trade investigations, such as those in the US and the European Union, this complaint has a wider geographical scope (extending beyond just China). Further, it also includes technology aspects: inclusion of thin film products whereas other trade investigations focused on c-Si components. Although this investigation has been rumored for some time, its actual implementation was still uncertain up to its start. The uncertainty appeared to stem from an internal struggle within India’s nascent PV industry between manufacturers and developers.
Similar to the US case, sides quickly formed on the anti-dumping issue within India. On the side of pro-duties were the manufacturers, led by Indosolar, Jupiter Solar Power, and Websol Energy System, and on the other side were the project developers. The pro-duty side is primarily concerned about the continued downward slide of module ASPs and how domestic Indian manufacturing can compete within a low-ASP climate. Conversely, developers are generally in favor of lower priced components to lower installed costs and retain healthy margins.
It is worth noting that the new complaints follow on from existing domestic content requirements for c-Si projects within Phase I of the National Solar Mission. In fact, it was these domestic content rules that pushed many solar developers to pursue projects utilizing thin film technologies (as that module type was exempt from domestic requirements in Phase I).
Apart from the extension of trade disputes into India, they have also expanded to the World Trade Organization (WTO). The WTO is now acting as the third-party arbitrator on some domestic content requirements in relation to existing incentive schemes. For example, the WTO is already involved in one case, brought by Japan and the EU against Ontario, Canada’s FIT program, and has also been involved at the behest of the Chinese government against incentive schemes in Europe and how they may (or may not) discriminate against foreign products.
The WTO is often seen as a secondary means of addressing trade disputes as it tends to act more slowly than domestic investigative bodies and the results can be less certain. Nevertheless, in situations where countries have little recourse, the WTO can prove an effective – albeit lengthy – deterrent to protectionist policies. But it is somewhat ironic that the WTO is being used to challenge domestic protection schemes at the same time as governmental investigative bodies are attempting to implement duties/tariffs to protect domestic industry.
Many of these cases are still in early stages and it remains to be seen how the overall PV industry will deal with the new developments. If the results of the US dispute are any judge, however, it is likely that most Tier 1 players will find ways to adapt to the new rulings, either via acquisition or small-scale domestic manufacturing investments.
In terms of overall PV industry health, a more optimistic standpoint is that they will hasten the departure of uncompetitive manufacturers and help achieve industry supply rationalization. However, more pessimistically, these investigations could create insulated zones of high-cost/high-price manufacturers, and this may drive up the cost of PV-produced power and slow the overall growth of the market. Either way, trade disputes bring market uncertainty, causing alarm bells to ring out within the PV investment community – at just the time when the PV industry needs stability and certainty to plan for the future.