Cost of imported solar cells and glasses to rise as Chinese slashes export rebates

The cost of solar photovoltaic components like solar cells, glasses and ribbons --- imported into India from China --- are expected to rise after the Chinese government recently slashed the tax rebates offered for exporting such components. Indian manufacturers feel that the rise in import costs will in turn affect the cost of future solar projects.

Grew Energy, the solar energy arm of Gujarat-based Chiripal Group that imports 75 per cent of its total annual requirements for solar modules from China, says that the Chinese government’s move to slash export rebates will have a direct impact on future solar projects. “After the Chinese government stepped in and slashed the export rebates enjoyed by the Chinese manufacturers, we have started looking to procure some of the products from Vietnam, Indonesia, Cambodia and Laos. However, as we give a 30-year warranty on our finished products, we will largely remain dependent on China due to the high quality of products,” Vinay Thadani, director of Grew Energy Pvt Ltd told businessline. 

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Grew Energy imports $200 million worth of solar components annually from China. “The reduction in export tax rebates which the Chinese manufacturers were enjoying will have a direct impact on the raw material costs of the solar module manufacturers in India. The cell manufacturers are also expected to be impacted. This in turn will have an impact on the cost of solar modules in India,” he added. 

Increased costs

The increased costs will impact the future bids and PPAs. The Independent Power Producers (IPPs) will factor in increased costs in the future bids as India remains heavily dependent on China for solar cells even as it builds domestic capacities. India imported $6.21 billion worth of solar photovoltaic cells and modules from China during the financial year 2023-24. A year ago, the imports stood at $2.25 billion. 

From December 1, the export tax rebate offered to Chinese manufacturers of PV products has been lowered from 13 percent to 9 percent. These include taxes for PV cells, solar glasses and solar ribbons, says experts. “Solar cells, glasses and solar ribbons which are part of a solar module will have a cost impact. For the ribbon the tax rebates have been reduced from 13 percent to zero. As the cost of ribbon in a module is less, impact will be minimal. However, reduction in export rebates of solar cell and glass --- cell costs 40 per cent and 10 per cent of glass --- will add to the cost for the products when it is imported into India,” Thadani added.

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Other manufacturers like Waaree Energies Ltd felt that a diversified supply chain helps when countries juggle their tax policies. “Countries will keep changing their tax policies from time to time. We are a global company and our focus is to manage volumes as per customer requirements and maintain our profitability. We should be in a position to do so under the prevailing market conditions. We are constantly looking at diversifying our supply chain,” said Dr Amit Paithankar, Chief Executive Officer, Waaree Energies Ltd. According to the company’s DHRP, Waaree Energies imports 90 per cent of its raw materials from various countries including China, Vietnam, Malaysia and Thailand. 

In order to counter this dependency on Chinese imports, Indian manufacturers like Waaree and Grew Energy are expanding their domestic production capabilities including setting up new solar cell manufacturing facilities in India. These initiatives aim to strengthen the domestic manufacturing ecosystem and reduce vulnerability to external price fluctuations.