Chinese Solar Demand Implosion to Kill India’s Tattered Solar Manufacturing Dreams

The Indian solar manufacturing industry has been in the ICU for the last couple of years but the government which has primarily been a big cause for this has turned a deaf ear. Even as India’s solar developers install gigawatts of solar projects gorging on dirt cheap Chinese low quality import dumps, solar manufacturers in India have seen all their hopes turn to dust. Despite every major importer putting safeguard and anti-dumping duties on Chinese imports, India has failed to do this, despite its own officials saying that the industry is grievously hurt and needs some kind of protection.

Also, read Non-imposition of Safeguard Duty Further Disheartens Solar Manufacturers in India

The Indian government has made some announcements every six months about supporting manufacturing under its “Make in India” scheme but has failed to follow through. Most of India’s solar capacity of 9 GW of modules lies unutilized or has been bankrupted as Chinese imports make up 90% of Indian demand. The government of India has failed in solar manufacturing just like in all other “Make in India” areas. Despite a lot of noise being created about ease of doing business, labor reforms etc. etc., the fact is that private investment in India has collapsed. With high capital costs, difficulty in getting the right skills and one of the worst land acquisition laws, it is no wonder that no one wants to set up manufacturing in the country despite the huge domestic demand.

The Chinese government has recently dropped a bomb on their own manufacturers by sharply cutting down the subsidies being given to local Chinese projects as there is a huge $15 billion hole in funding. China forms almost 50% of the global demand and any demand reduction there will lead to huge oversupply and price declines. Bloomberg is expecting a 30% plus reduction in solar panel prices this year, which means that even with duties, Chinese imports will flood the world as massive supply tries to find demand at whatever price or location. The recent Indian SECI tender which had tied up 10 GW of solar projects with 5 GW of manufacturing will also most probably be put on hold, as prices drop sharply making it difficult for any new investment in India to come up. With the whole world to be flooded by Chinese solar panels, building any new capacity may be a very bad idea. The already battered Indian manufacturers will find it hard to survive this new onslaught of low prices as their factories and business plans are already in a tattered and battered shape.