Solar Manufacturers’ Pleas Fall on Deaf Ears

The Indian government recently announced that they would take no actions on the cheap Chinese modules that are being dumped onto the Indian market. India is expected to have a bumper year in terms of solar installations with various state policies – notably Gujarat, Rajasthan and Madhya Pradesh expected to add significant capacity over the coming months.

While the government’s stand to support a freemarket is commendable, it could be coming at the expense of local productivity, growth and employment. The misery is only compounded by the fact that we not one, but TWO countries that are dumping their modules here, the second country ofcourse being USA. The situation is rather comical – USA has accused China of dumping modules in their country through predatory pricing while also expressing significant displeasure in the fact that the Indian government has closed out their domestic market by imposing domestic content requirements for projects coming under the national policy – this they claim is to protect the interests of their domestic manufacturers.

Modules manufacturers from the USA might be inflicting much the same damage as Chinese manufacturers are on US manufacturers as the US modules are on the Indian market. About 90% of the projects coming up in India are using thin film modules manufactured in the US, virtually wiping out any hopes that the domestic manufacturers would find a market. Low interest loans offered by establishments such as EXIM bank of US have been one of the main reasons for the preference of imported modules. Project developers are driven by a desire to procure modules for their projects by costs and returns alone; thus prefering to import modules as opposed to sourcing them locally.

The achievements envisioned under the national mission in terms of manufacturing are unlikely to materialize if the current trend is to continue. I believe in order to help the domestic manufacturers, one of the following measures would have to be taken:

Strict enforcement of domestic content requirement or levying a higher tax on foriegn modules – this though would not be in the spirit of a freemarket
Institute priority sector lending for PV manufacturers – this would help drive down the price of our domestic modules a. la. China
Ensure the availability of low interest loans for project developers – in this scenario, the developers would not be limited by price of modules and hence would have a wider array of choices – many of which could be from the domestic segment too!

I hope that some consensus on this matter is reached sooner rather than later – too late and we would have no solar manufacturing segment left to save.