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November 5, 2019Regional Comprehensive Economic Partnership (RCEP) is a trade agreement between ASEAN countries and its six FTA partners, whereby they agree to reduce or eliminate tariff and other barriers on imports and exports. India currently sends 20% of all its total exports to the above countries and imports 35% from these countries. China is the biggest exporter in India. India’s trade deficit with these countries increased to $105 billion ($53 billion is only with China) in 2018-19 from $54 billion in 2013-14.
Among electrical machinery, equipment, appliances, plastic articles, iron and steel, aluminum, ceramic products, man-made fibers and furniture, China also exports modules and solar cells into India in bulk numbers which are at least 10%-20% cheaper than Indian made solar cells and modules. If India becomes a signatory to the RCEP, the Indian PV industry could be in big trouble.
“China offers land almost free, cheap power, manufacturers get subsidy and numerous export incentives. They also have the economies of scale as they have created huge capacities”, said Amit Gupta, director, Vikram Solar.
Source: Business Today
There are no adequate solar cell and panel manufacturing capacities in India and hence the country imports almost 85% of its solar needs from neighboring countries like China, Taiwan, Vietnam, and Malaysia. Chinese solar manufacturers, on the other hand, get numerous export incentives, free land, cheap power, subsidies, etc. India currently has only 9GW and 3GW of solar module and cell capacities, respectively. Many solar manufacturing companies are shutting given the lack of support and adequate demand as installers generally prefer to buy the cheap solar components supplied from neighboring countries. Some of the large module makers in the country include Waaree Energy, Tata Solar, Moser Baer, Indo Solar, and Vikram Solar while solar cell manufacturers include BHEL, Central Electronics Limited, Indo Solar and Moserbaer.
“The market is volatile and investors are very cautious and for those executing projects, margins have come down drastically”, said Amit Gupta.
The pace of development and new projects has slowed down in India. If India further signs this RCEP, there will be free trade of solar components between India, China, and other neighboring countries, completely destroying the domestic solar manufacturing industry. The industry is concerned and is urging the government to come up with a proper solar policy to reduce these concerns and to keep up the pace of new capacity addition.