Hi Friends,

Even as I launch this today ( my 80th Birthday ), I realize that there is yet so much to say and do. There is just no time to look back, no time to wonder,"Will anyone read these pages?"

With regards,
Hemen Parekh
27 June 2013

Now as I approach my 90th birthday ( 27 June 2023 ) , I invite you to visit my Digital Avatar ( www.hemenparekh.ai ) – and continue chatting with me , even when I am no more here physically

Tuesday 27 March 2018

FW: TIME TO PROTECT THE ENTIRE ECONOMY


From: Hemen Parekh [mailto:hcp@recruitguru.com]


Sent: 27 March 2018 11:54



Cc: ssbhalla@gmail.com; bibek.debroy@gov.in; ashima@igidr.ac.in; rr1@nipfp.org.in; ratanp.watal@gov.in; ceo-niti@nic.in; Indian Think Tanks; TV Anchors; Editors; Shereen Bhan; Gurudatt Kundapurkar; Haridas Shenoy; vch-niti@gov.in; Pradeep Talpade; Indrajit Sethi; L&T G K Apte; hcp@recruitguru.com


=============================================




Subject: TIME TO PROTECT THE ENTIRE ECONOMY



This  was   Expected  !

-----------------------


Economic Times ( 21 March ) carries following news :





Maharashtra’s latest 1,000 MW solar auction received bids of only 530 MW and thus had to be postponed for the fourth time 

Similarly, Karnataka’s 1,200 MW auction for projects at the Pavagada Solar Park drew bids of only 550 MW at the second effort 

REASON  ?


With over 90% of solar equipment being imported, solar developers have become cautious ever since the Directorate of Safeguard Duty, reacting to a complaint from local solar manufacturers, proposed imposing 70% safeguard duty on imported solar panels in January this year on the grounds that such imports were crippling local industry 


To get a clear picture of the current  “ Solar Stalemate “ , let us turn to the following news :






Arguments advanced by Solar Manufacturers Association ( ISMA ) for levying 70 % Safeguard Duty , are as follows :


At current prices and import trends, it will result in net foreign exchange outflow of Rs. 2.44 lakh crore, or approximately $45 billion. India currently has the third largest solar installations in the world after China and the US.


The US and the EU have imposed duties on import of cells and modules from China. Consequently, China’s solar gear exports to the US and EU have declined from 31.87 per cent in 2014 to 4.74 per cent in 2017.

At the same time, China’s exports to India have grown exponentially, from 2.92 per cent in 2014 to 32.32 per cent in 2017. Chinese companies tend to bring down prices significantly and push out the local manufacturers, according to ISMA.


India’s solar programme is currently China-centric, accounting for nearly 90 per cent of market share directly or indirectly through their off-shore companies.




This news report goes on to add :


Safeguard duty on imports from China will result in immediate investments in manufacturing capacities in India. The industry estimates that in 18 to 24 months, India will have an integrated solar manufacturing ecosystem with an annual capacity of 15 GW. This will result in 250,000 new jobs.

India will emerge as a viable supply base of solar products for global markets with a potential to export $1.5-2 billion annually, according to industry players.



But it also says :


India will emerge as a viable supply base of solar products for global markets with a potential to export $1.5-2 billion annually, according to industry players.


“We estimate that safeguard duty may result in a temporary increase of Rs. 0.50 per unit of power, which will progressively get neutralised as manufacturing capacities get ramped up in India,” said ISMA.


MY  TAKE  :


   *   If Safeguard duty were to result in “ a temporary increase of Rs 0.50 per unit “ ,
        why there are no bidders in Maharashtra / Karnataka  ?


       And this despite Power Minister, Shri R K Singhji saying :


      “  The duty structure prevailing on the day of the bid shall be implemented. Any
         change in taxes and duties , would be passed through.


        Current bidding document provides for passing through taxes only


        We would provide for passing through taxes and duties “




{ Source : DNA / 15 March / Govt to amend solar bid rule to allow pass-through of duty hike  }



        But , it appears that the DISCOMS are not happy and if anything , want to

        renegotiate , even already entered PPA , downwards , since prices of solar panels

        imported from China , between July-Dec 2017 , has actually fallen by 25 %  !

  

To meet its target of 100 GW of solar by 2022 , India must add 1.5 GW every month , for the next 60 months .


That means , in the next 24 months, it needs solar panels for adding 36 GW


According to ISMA , it will take its member companies to achieve annual manufacturing capacity of 15 GW , in those 24 months !


Considering the following news report , is this likely to happen ?


{……domestic production stood at 246 mw in FY15 and is likely to increase to
 
  1,164 mw in the current financial year 2018  }




Given this background , if a Safeguard duty is imposed, it is bound to result in our missing the target. 


What would that lost generation ( possibly  40 GW - 50 GW ) cost our economy ?


How many more jobs could our economy have added with that 50 GW  ? and that too , at a tariff of Rs 2.44 per unit ? 


And if that tariff was to fall to Rs 1.5, could we possibly create a MILLION jobs  ?



At present, customs duty on solar cells / modules / panels is levied at 7.5 %
     and, despite this , imported solar cells / modules / panels are 25 – 30 % cheaper

     than local products !




In light of this background , questions that the Policy Makers may want to ask, are :


Between the full scale solar projects manufacturers and the roof top solar project manufacturers , there are about 11 local companies .

     How many persons do these employ , whose jobs are getting threatened by
     cheap imports from China ?


How many more jobs can we create , if we succeed in installing 50 GW of solar ( with imported supplies ) in the next 24 months , instead of just 2 GW ( with local supplies ) ?


If per unit price of solar were to GO UP from Rs 3.5  to  Rs 4.0 , how much will our economy become “ expensive “ , and how will that impact our exports ?


On the other hand , if we altogether abolish that current custom duty of 7.5 % ( on the imports from China ), can we possibly BRING DOWN the currently quoted tariff from Rs 2.44 ( Bhadla in Rajasthan ) to Rs 1.5 per unit , and turn India into a LOW  COST   ECONOMY  ?


         
27  March  2018

www.hemenparekh.in / blogs        


No comments:

Post a Comment