Indian developers may hoard Chinese solar cells, modules before imposition of safeguard tariff

India's decision to cut imports of solar cells and modules from China by imposing a 25 percent safeguard tariff on them may have unintended consequences.

According to a Bloomberg report, the tariff may cause developers to stockpile Chinese solar equipment before the tariff is imposed two or three months down the line.

Also, since the Chinese imports are expected to remain cheaper than equipment manufactured domestically even after the tariff is imposed, India is seen relying heavily on them for at least the next couple of years.

The move to impose this safeguard tariff will raise costs for solar project developers by at least 12 percent, and is unlikely to hamper China's position as the world leader in supply of solar panels and modules, the news agency quoted ICBC International Research as saying.

India is currently China's largest market for solar cells and modules, with 31 percent of its exports being sold here, according to China Chamber of Commerce for Import and Export of Machinery and Electronic Products.

The Ministry of New and Renewable Energy estimated that India's current manufacturing capacity of 3 GW worth of solar cells a year can only meet 15 percent of the country's installation target of 20 GW per year.