BHEL Protests against Cheap Solar Products

India’s state owned capital equipment maker BHEL has joined the Indian solar manufacturers in protesting against cheap solar panel products. BHEL is planning a $500 million investment to build a solar cell factory in at Sakoli which is a part of Union heavy industries minister Praful Patel’s constituency Bhandara. BHEL is currently trading at one of the lowest valuations in its 10 year history and its not a big wonder why. The company has benefited in the past as did other machinery and engineering companies from an infrastructure investment boom. However those glory days are over for the company as it faces competition from the Chinese companies and decreasing orders flow.

BHEL is arguing its case by claiming that the price of the solar panels is below the costs (a fact which is not true given that some Chinese solar companies like Jinko Solar are making positive gross margins). The company is taking its case to its parent industry ministry which will take it forward to MNRE. Note the current draft of JNNSM Phase 2 is non-committal about providing protection to India’s domestic solar manufacturing sector. The Commerce Ministry has already started an anti dumping investigation and the Indian solar power developers are trying to counter the move as well. Note the duties imposed by US on Chinese solar panels of 25-250% has not helped their industry. In fact Suntech has reduced its production while other big solar players like Yingli have managed to win a gigantic 200 MW utility contract in California. The cost level difference between the biggest and lowest cost solar makers and others is so big that a 20-30% duty is unlikely to make a big difference. Recently after much lobbying, the Indian Government imposed a 10% duty on imports of power equipment as Chinese companies had captured half of the Indian market.

India has already imposed a 10% duty on imports of power equipment

Indian Government is set to implement a 10% Import Duty on Foreign made Power Equipment in a few weeks. India has a huge Energy Deficit as Supply is always one step behind India’s Fast Growing Economy. Low cost Chinese equipment providers like Shanghai Electric and Dongfang Electric have won almost half of the power equipment orders raising concerns amongst the Indian administrators. India’s Domestic Companies have been caught on the wrong foot by the Cheap Chinese Equipment. This Duty is aimed at leveling the field for the Domestic Companies. L&T and BHEL are the only significant players and would benefit quite handsomely from this measure.

Read more about Solar Lamps in India and Solar Products in India.