Indian Solar Industry depends heavily on China

India has a significant capacity to make solar panels and cells but most of it is distributed amongst tens of producers most of which have closed their factories and have nameplate capacity on paper only. The Indian solar industry which is expected to grow to 5 GW this year making it the world’s 4^th largest, depends mostly on Chinese solar panel imports to develop the large utility scale power plants that the central governments like to touts.

Though these Chinese solar panels with their very low costs have allowed the plants to be run at very low cost of levelized energy (LCOE), the Indian manufacturers have been pushed to the sidelines. With India losing its DCR case to the USA at WTO, now even the limited and puny protection that it gave the domestic manufacturing industry is gone. The Indian industry is made up of lame duck companies who are mostly into low value added activities like assembly of solar cells. There is not a single company which makes polysilicon or solar wafers which are the main raw materials for making these solar cells. They are also some debt ridden dinosaurs such as Indo Solar that make solar cells using obsolete equipment and which may suddenly die, given that they were only surviving due to the domestic content requirement (DCR) policy in the JNNSM rounds.

Also read List of Top Rooftop Solar Panels to buy in India

The new government has numerous times said that it would like to boost domestic manufacturing but in this new growth dynamic industry, even the existing manufacturers are gasping for survival. There is no level playing field as the costs in China are much lower than that in India. At the current solar panel price of 40 cents/watt, it would be hard for any Indian to produce these solar panels at that cost leave alone sell at that price.

In 4 months, India imports $580 million of solar panels which on an annualized basis implies almost $1.75 billion in solar imports. 80% of these imports or $1.2 billion was from China alone. It is no wonder that China retains such a huge trade surplus in case of India. The Indian solar energy capacity is going to double to around 10 GW in the net 2-3 years as per the government plans and its strong commitments to the Paris climate change treaty. This might mean that the imports from China might also go upto $3-4 billion a year, which would further accentuate the trade deficit and defeat the chances for India to create a huge new industry with a hundred thousand skilled good paying jobs that could have been created.

It is not only India’s solar market that faces huge imports from China that is drowning the Indian manufacturers. Electronics, chemicals, glass and many other industries suffer from low cost Chinese imports and many industries have shut down altogether as economic viability was no longer there. The Indian entrepreneurs have turned trades to survive as many industries have hollowed out under relentless Chinese competition. India’s pleas to China to open up the Chinese market for Indian services, pharma and IT exports have mostly fallen on deaf ears, as India runs as massive multi-billion dollar deficit every year.

India has asked China to address the burgeoning trade imbalance while making a strong pitch for Chinese investments in its micro, small and medium enterprises (MSME) sector, specially in fields like IT, digital, mobile components and automobile ancillaries.

Source