The state of solar manufacturing in India

Indian solar manufacturing remains down in the dump, despite the DCR policy implemented by the government last year and massive growth of the domestic market. India’s solar market may show a 100% CAGR over the next three four years, as government has massively supported the solar energy industry in India by pushing through gigawatts of solar tenders. Subsidies worth thousands of crores have also been given to the industry, even as other power sectors such as coal and gas lag behind. Despite the massive government push, the performance by Indian solar manufacturers has been tepid at best. Though most have announced expansion in capacity, none of the Indian manufactures are globally competitive. They completely lack R&D capabilities and are dependent on foreign countries for their raw material requirements. Some of the major companies such as Waaree, Vikram Solar etc. even import solar cells and just assemble the modules in India. Despite a good last couple of years, they have not really been able to add scale. The large Indian conglomerates such as the Tatas, Reliance, Adani etc. have never really put their money into the solar manufacturing industry. Though Tata has a very large presence in the solar sector, it has failed to capitalize and become a global player. Adanis and Reliance have made grandiose billion dollar announcements, without ever really doing anything.

The local manufacturers have also got a major portion of their business coming from solar EPC and development for which they import Chinese made solar modules. So local protection is a double edged sword for these players and even after the government of India overruled its own department DGAG in imposing anti-dumping duties, these companies never made too much of a noise. They are making more money from utility scale solar power EPC and development, rather than by making solar panels which are a side business for most of them. Tata Solar is also one of the biggest EPC players in India’s fast growing solar sector and does not seem to be too much concerned about the evisceration of India’s solar manufacturing sector though imports.

It is not a surprise that the government is willing to make a compromise with USA on its DCR policy. USA had filed a case against India in WTO that its DCR policy was a violation of preferential treatment not to be given to domestic manufacturers. India had lost the case and is in bilateral talks with USA to solve this issue. Indian solar makers who have no clue and no input on what to be done are making some statements that it is not good, but they don’t really have a long term strategy on what to do as well. They are like fish out of the water flopping here and there, without having a long term vision. It remains to be seen whether the likes of Trina Solar and JA Solar which want to set up solar factories in India will make “Make in India” a success in the solar sector. The home grown players certainly don’t look like they will be able to do anything worthwhile.

Domestic solar manufacturers are alarmed over a proposal the government has sent to the World Trade Organization, seeking compromise in the dispute over the domestic content requirement in India’s solar programme, prompting some firms to put their expansion on hold. “We wanted to double manufacturing capacity from 500 mw to 1,000 mw per year but now we won’t be doing so until there is clarity in government policy,” said Hitesh Doshi, chairman at solar module manufacturer Waree Energies Ltd.
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