As China dumps in India's solar market, domestic industry shrivels

Top Stories

»	Indiaâs export outlook brighter as manufactured goods gain share: RBI
»	Private consumption driving growth in Q3 with rural India taking lead: RBI
»	Indian MSMEs create about 10 crore jobs in 15 months
»	Indian prefer Q-commerce for daily essentials, physical stores for high-value buying
»	Embedded finance to unlock $25 bn revenue opportunity for Indiaâs platforms by 2030

Richa Sharma | 07 May, 2012
India's National Solar Mission may be offering huge opportunities to global players but the domestic solar industry is bleeding owing to poor policy and stiff competition from foreign companies, especially the Chinese.

The National Solar Mission is a major initiative of the Indian government to promote ecologically sustainable growth while addressing the country's energy security challenge. Launched in 2010, it sets a target of 1,100 MW during the phase I by 2013 and 20,000 MW of installed solar generation by 2022.

The picture looks rosy when one looks at the growth of the solar energy market in India in the last two years and the vast potential the sector offers due to an abundance of sun (a good 300 solar days annually).

New solar energy investments in India increased to more than Rs.12,000 croreout (about $2.5 billion) in 2011, according to the Council on Energy, Environment and Water.

But things have become gloomy for the domestic industry, which is unable to catch up with global players, who get incentives like subsidies for exporting their products. China is dumping solar products in the market the world over at much cheaper rates and many countries are coming up with anti-dumping guidelines to give an edge to their domestic companies.

"There is massive potential for solar energy in India with over 30 percent of population still having no access to electricity. The government came up with the solar mission but unfortunately it remained silent on what role Indian solar companies can play," said Ajay Prakash Srivastava, president of Solar Energy Society of India (SESI).

The ministry agrees that the manufacturing in India has suffered.

"I understand the manufacturing industry has suffered quite a bit and it's a weak area in the mission," said Tarun Kapoor, joint secretary in the ministry of new and renewable energy, the nodal agency to run the National Solar Mission. In this direction, he said, the government is planning an integrated approach during the second phase of the mission (2013-2017).

"The government can do something seeing the dramatic change in the sector with the price crashing," said Kapoor.

The industry got a ray of hope after New and Renewable Energy Minister Farooq Abdullah promised that the government would limit imports and encourage domestic manufacturing. But at the moment, the picture is gloomy.

According to SESI, domestic solar companies are running with only 15-20 percent of their capacity and even big companies likes Moser Baer, TATA BP and Indosolar have either shut down operations or are running into huge loses.

"A lot of companies invested in the solar energy market around the year 2000 when European countries called for clean energy and Indian companies made good profit. But now European markets have reached stagnation and China has taken the lead in providing products like thin films, solar photovoltaic and other products at much cheaper rates," said Rajinder Kumar Kaura, secretary general of SESI.

SESI feels India has much better technology but there's need for a level playing field, as China offers subsidies to their companies.

"The government should offer subsidies to domestic companies or put anti-dumping duty on foreign companies. The issue is that crores of rupees from India is going to foreign companies selling their products here and that is generating employment in those countries rather than here," he said.

India should draft a policy where rather than importing solar products, foreign companies are asked to set up their units in India so that it can help generate jobs and the money stays in the country, said Kaura.

With the European Union and the US already planning anti-dumping guidelines, Indian industries have also approached the Director General of Anti-Dumping to come out with similar guidelines.

"The problem is there is oversupply of solar energy products and countries like China are exporting 95 percent of their manufactured solar products, thus increasing the competition and slashing the cost. There should be anti-dumping guidelines to help the domestic industry grow," said H. R. Gupta of the Solar Energy Manufacturers Association of India.

Recognising the problems, the Ministry of New and Renewable Energy constituted a solar advisory panel headed by Anand Mahindra, managing director of Mahindra & Mahindra. The panel was set up in January.

The thrust of the committee's mandate is 'manufacture', so that the Indian solar industry evolves with India-made equipment.

Although there is no timeframe for this panel to come out with solutions, industry people say they need quick solutions.