Anti-dumping duty on Ethylene Vinyl Acetate (EVA) sheets for solar modules

In April this year, the Indian government notified the imposition of anti-dumping duty on EVA (Ethylene Vinyl Acetate) sheets for solar modules imported from China PR, Malaysia, Saudi Arabia, and Thailand for a period of five years—-the aim was to eliminate injury caused to the domestic industry by unfair trade practices of dumping and to re-establish open/fair competition in the Indian market.

In a notification, the Department of Revenue said that after considering recommendations of the commerce ministry’s investigation arm Directorate General of Trade Remedies (DGTR), it was imposing the duty—-in the range of $537 to $1,559 per tonne, on imports of “EVA sheet for solar module” being exported by these four nations. “The anti-dumping duty imposed shall be effective for a period of five years (unless revoked, superseded or amended earlier),” it further added.

Last year, (in April 2018), the office of Directorate General of Anti-Dumping and Allied Duties (DGAD) (now known as Directorate General of Trade Remedies) initiated an investigation into the import of EVA sheets for solar modules from China PR, Malaysia, Saudi Arabia, South Korea, and Thailand. However, imports from South Korea were excluded from the investigation as the DGTR found that these imports are mostly EVA resins, the raw material for EVA sheets.

As per the government notification, “Imposition of duty is required to offset dumping and injury caused by dumped imports from China, Malaysia, Saudi Arabia, and Thailand. However, having found that the volume of imports from South Korea was below the minimum level during the investigation it is appropriate to terminate the investigation against South Korea in terms of Rule 14(d).”

What prompted the decision

The petition was filed by RenewSys, Vishakha Renewables Private Limited, and Allied Glasses Private Limited. It mentioned that there is no known difference between EVA sheets imported from the countries mentioned above and those produced by the petitioners—-also, the consumers could use the two interchangeably. RenewSys went on to add that they could produce EVA sheets of all widths and thicknesses as desired by solar module manufacturers in India. The investigation focused on EVA sheets exported to India between October 1, 2016, and September 30, 2017, clean energy consultancy Mercom reported.

Essentially, EVA sheets are a polymer-based component used in the production of PV modules and to seal in solar cells by supplying adhesive and cushioning functions. The sheets are required to keep glass, cells, and backsheets integrated while supporting modules throughout their service lifetimes.

Owing to China’s dominance in the manufacture of solar modules, many Indian makers began depending on them for the implementation of solar projects in India. The numbers speak for themselves as in the year 2017, Chinese solar manufacturers were solely responsible for 68% of global solar cell production and over 70% of the world’s production of solar panels/modules.

Sensible move?

According to industry expert Mr. Sunil Jain, the move is an extension of Make in India and domestic manufacturing. “Initially, they imposed the safeguard duty on the panels and cells, now, they have imposed duty on EVA. So, they are encouraging local manufacturing.” However, the problem is when safeguard duty has been imposed on cells and EVA—-since the latter is not manufactured in India, the domestic manufacturing cost will go up further and again, there will be imports from China. Duty, he adds, must be imposed only when there is enough domestic production capacity in the country and since we don’t have that, it is counterproductive.

Refuting concerns expressed by sector majors, a senior official of the Ministry of New and Renewable Energy (MNRE), who chose not to be named, clarified, “When the safeguard duty was imposed, there was a general apprehension that there are some indirect subsidies coming, which are not upfront from those countries from where India is importing and it is destabilising the growth of the manufacturing in India. There is an independent regulatory body under the Ministry of Commerce, which made certain recommendations for that.”

These duties, the official reasoned, are only for a certain period. Many of the companies have come up with plans for manufacturing within India also—at that point in time, the decision was taken and considered important because there was a trade-off—It means either you look for a reduction in tariff, based on the foreign imports, or a judicious decision is taken that even if it is 10 paise or 15 paise or more than that, it will be utilised for technology development during that period. The fact remains that it has been neutralised to a large extent, by reducing the cost of the total solar power and panels during that period.

As far as the solar sector is concerned, the deployment has suffered only from the cost imperatives, but beyond cost imperatives, it does not have much of an impact (on the deployment levels), because nowhere does evidence suggest that safeguard duty has really altered the deployment scenario. All the tenders are coming in as usual and states have begun floating the tenders—if at all there are certain issues that are internal in nature, like the land issue in Gujarat or transmission issues in states like Karnataka, these have nothing to do with safeguard duty. Even if it costs power, in the long run, we will achieve a larger goal and from that point only, the safeguard duty was imposed, the official from MNRE added.

According to Crisil, a global analytical company providing ratings, research and advisory service, the cost of solar power projects and did not result in any significant offtake for the domestic manufacturing sector, following the imposition of the safeguard duty.

Experts in the renewable energy sector concur with the fact that some amount of safety measures are required and believe certain measures are needed to curb dumping in India, as it could lead to a pile-up of solar waste.

Surbhi Singhvi, manager/consulting, Bridge to India and author of the report Managing India’s PV module waste explains, “Certain countries are dumping materials in India at a cheap cost, because they know that a market for it exists—this will help them gain monopoly and later they can benefit from this monopoly.  EVAs are part of a solar module and the kind of material that it uses, whether they are imported from China, Korea or any other country— it is going to be harmful to the environment nevertheless.”

Two of our main recommendations, she adds, have been that we should have a quality standard in place—-the module manufacturers should know what kind of modules they can use—-in making solar modules—they must be sustainable, environment-friendly and recycle friendly. Right now, we don’t have any standards in place to make solar modules—- therefore, the quality standard needs to come in—secondly, some of the main recommendations that we have made is, there has not been a policy or a regulation which clearly specifies responsibilities—to take care of the module from Day 1.

Citing the instance of Europe, Surbhi avers that when the module manufacturer supplies modules in the market, they are accounted for the quantity that they supply, and they must recycle it—–to ensure that they adhere to the regulations. “Therefore, responsibility has to be allocated and this will help people know from the very beginning as to who is liable to take care of the waste which is going to be generated 25 years down the line,” she concludes.

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Sapna Gopal is an independent journalist and writes on clean energy