Bookmark and Share

Indian solar companies win a Pyrrhic Victory

2 Comment

Indian companies Fear Foreign Competition

Indian companies raised a massive hue and cry against the Indian government’s draft to allow foreign made modules to be used in construction of solar power plants. India has  a target of building 1000 MW by 2013 under JNNSM which impiles almost 9000 crores or $1.8 billion in potential business for solar module makers.But the government’s proposal for allowing import of modules would have destroyed the billion dollar hopes of Indian producers like Moser Baer,XL  as they would have found tough to compete with imports.So we heard some very funny arguments from these companies against imports.

Making Modules Requires Little Value Addition and has Low Entry Barriers

However according to this news item from the Hindu,the government will mandate local content provisions for modules but will allow import of cells.Note local content requirements have been implemented by Ontario this year and by China for wind earlier.For people who don’t understand the solar industry in detail – Solar Modules are made by assembling solar cells which are in turn made from silicon wafers.The Module part of the supply chain is where the least value addition occurs.It is cheap to set up a module making plant and requires little expertise and capex.

Pyrrhic victory for Indian companies

I think if this proposal becomes law , then it will be a pyrhicc victory for Indian companies since it will be more profitable to import cells (forms almost 70% of the total cost of modules) and do the assembly in India.Indian solar companies in my opinion won’t be able to compete in price or quality with imported cells .China has already raised its marketshare to 50% of the world solar market from 5% in 2006.Expect the Chinese,Taiwanese and to some extent US and European cells to dominate the Indian market


I think the Indian government needs to discuss and examine the local content requirements in more detail.While “local content” benefits the growth of industry,promotes research,creates jobs and might lead to creation of “national champions” like Sinovel, the flip side is that it raises the cost of power plants leading to higher burden on consumers.A balance between the two needs to be achieved.China implemented the law for local content of as high as 70% for wind equipment in 2004  and once their companies were big enough they reduced it to 5% in 2010. Something along those lines should be thought by the Indian government also.

Local content to shine in solar photo-voltaic projects – Hindu Business Line

The Ministries of New and Renewable Energy (MNRE) and Power plan to make it mandatory for solar power developers to source crystalline silicon-based modules from domestic manufacturers.However, they can import solar cells for manufacturing these modules for the photovoltaic (PV) projects.This provision will be in the soon-to-be notified guidelines by the Ministries for implementation of the solar power projects under the Jawaharlal Nehru National Solar Mission (JNNSM).

The players argue that there is enough cell capacity in India at present to cater to the requirement under Phase-I of the Mission.Tata BP, Moser Baer, Indo Solar, XL Telecom & Energy and Solar Semiconductor have been traditionally manufacturing and exporting solar cells and modules to Europe, Japan and the US. The players are slated to have a total capacity of 750 MW by the year end.


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

2 Responses so far | Have Your Say!