China’s decision is a blessing for Indian solar power developers as the existing capacity in China would be diverted to India, further bringing down prices here, but it could make the already troubled Indian solar manufacturers sore.
Domestic manufacturers say they are already rattled by the ripple effects of further dumping by the Chinese manufacturers in India, once their internal demand is met. “The effects of dumping would be extreme on the domestic manufacturers leading to the threats of partial or complete shutdown,” said Sunil Rathi, Director, Waaree Energies.
The module prices in India are likely to come down by up to 25%, industry experts say, which would render the equipment manufacturers in India uncompetitive. “The Chinese move is also a blow for local manufacturing plans. I think the government needs to decide how they want to prioritise the development of the sector and how critical manufacturing is to them,” said Vinay Rustagi, managing director at solar consultancy firm Bridge to India.
The government’s solar manufacturing tenders, however, could see revived interest from international players, and they may seek to diversify and reduce cost by localising, said Kameswara Rao, leaderenergy, utilities and mining, PwC India. The domestic manufacturers, who are already reeling under the uncertainty around safeguards duty on solar imports from China and Malaysia, can now only look to the government for respite. “For domestic manufacturers, to retain their market share, the primary support that the government can extend is through the immediate implementation of Safeguard Duty,” Rathi added.
Indian Solar Manufacturers’ Association (ISMA) last year filed a safeguards petition to probe the solar imports from China and Malaysia. “This shows that the Chinese are capable of dumping at any cost to India, which is an attractive market for them. Without safeguards duty, the domestic players will not survive, as reflected in the preliminary findings of the Directorate General of Safeguards (DGS),” said Dhruv Sharma, governing council member of ISMA.
The Directorate General of Trade Remedies later this month plans to hold a public hearing on the imposition of 70% safeguards duty which was recommended by the DGS in January this year. “The hearing later this month becomes very critical in terms of protection from imports and falling prices, because without duty protection, they will be unable to compete with falling pricing from China,” Rustagi added.
India has set itself a target of achieving 175 GW renewable energy capacity addition by 2022, and power minister RK Singh earlier this week said that the government will over-achieve this target by another 50 GW within the same timeline. With over 100 GW of this target dependent on solar power, and the government’s plans to scale up domestic manufacturing in India by offering capital incentives to the players, the move by the Chinese government comes with bittersweet overtones.
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