Sunny days ahead

Just about four months ago Indian solar cells and modules manufacturers were complaining about “injury” from cheap imports and demanding protection. Today the mood in the industry is upbeat.

The reason is simple. In the words of H R Gupta, Managing Director, IndoSolar, the “message coming from the government is very encouraging.” Quoting the Ministry of New and Renewable Energy (MNRE), Gupta says that 10-15 GW of solar installations every year will be a reality. Since a slice of it is reserved for plants that shall use only locally made cells and modules, the industry is happy.

“Domestic manufacturing is reviving,” Gupta told

BusinessLine . There is a visibility of 1,700 MW under ‘domestic content requirement’ stream of tendering, where companies that win mandates to sell solar power shall use only India made cells and modules in their plants. Of this, 660 MW has already been offered; the other 1 GW is expected to hit the market in the next three months.

Factories in India can make 1,386 MW of cells and 2,756 MW of modules, but most of them, particularly the cell makers, have been lying idle. And now, due to a revival in demand many companies are de-mothballing their plants. For instance, IndoSolar has a name plate capacity of 450 MW. Today, only a part of it is running, but the company is onto ramping up production to higher levels. Hyderabad-based Surana Ventures currently produces modules, though it can produce cells too — imported equipment that can make 120 MW of cells is sitting in the plant. The company’s Managing Director, Narender Surana, speaks of bringing it to life by June. Tata Power Solar, another cells-cum-modules manufacturer has similar plans.

Waaree Energies and Vikram Solar, who buy cells from the market and make modules from them, have spoken of doubling their capacities from the 500 MW each. “It is not just the domestic content requirement (DCR) market,” says Sunil Rathi of Waaree Energies, “the entire market is very big.”

WTO dispute

Conversations with Indian solar equipment manufacturers indicate that they are not too worried about the fallout of the WTO ruling last September against India’s DCR rules. Gupta feels that the government would be able to find a solution bilaterally with the US, which raised the issue, taking the line that the DCR is but a very thin slice of the market. Though this refrain failed at the WTO, the government hopes to make it work across the table. Even if the government is unable to convince the US, it would still be able to tell the Railways and the Defence to use India-made cells and modules in the solar plants they put up. These are labelled as departments of the government and WTO permits buy-local rules under ‘government procurement’.

Gupta and Rathi stress that the Indian industry is globally competitive both in terms of price and quality, but need protection because manufacturers (mainly) from China are dumping their products into India. Rathi says Indian companies are exporting even to the quality-conscious West — Waaree itself is currently executing a 15 MW UK order and is “expecting another big one.”

In the first six months of the current financial year, India’s solar exports were $47 million, compared with $168 million in the full year 2014-15, and $282 million in 2013-14.

Yuan devaluation

For sure, the devaluation of the Chinese currency is a worry — it adds weight to the manufacturers’ demand for either protection in the form of an anti-dumping and safeguard duty, or a market reservation for locally made products.

India imports a good deal of solar cells and modules — Indian manufacturers are quick to point out that this goes against the grain of ‘Make in India’. Solar imports were $711 million in 2013-14, they rose to $821 million in the following year, and $645 million in the first six months of the current year.

This surge in imports spurred Indian manufacturers to reiterate their demand for both anti-dumping and safeguard duty. Even though the imports are continuing to rise, domestic companies are, as Gupta puts it, “not following aggressively” the demand for protection. Gupta denied that the industry might have toned down its demand at the behest of the government, but none of the industry leaders offered an alternative explanation to why the demand is not being followed upon. In the meantime, imports are rising.

It is thus the DCR rule that has come to the aid of the industry. Surana wants the rule to be tweaked further, with separately assured markets for modules and cells. He points out when module companies import products such as junction boxes, aluminium profiles and sealants, they have to pay a 50 per cent duty, while fully-made Chinese modules enter the country duty-free. A 50 per cent duty on goods that account for 30 per cent of value, creates a 7 per cent setback versus fully-made imported products. On top of this, there is a 5 per cent state-government levied sales tax.

However, despite such niggles, domestic manufacturers report rising business prospects — thanks mainly to the DCR.