“We
will pool our scientific, technical and managerial talents, with
sufficient financial resources, to develop solar energy as a source
of abundant energy to power our economy and to transform the lives of
our people. Our Success in this endeavor will change the face of
India. It would also enable India to help change the destinies of
people around the world.”
Those are the words of Hon.
Prime minister of India Dr. Manmohan Singh at the time of addressing
National Action Plan on Climate Change (NAPCC). Clear, determinant
and encouraging speech by prime minister turns into the action by
announcing Jawaharlal Nehru National Solar Mission (JNNSM). A mission
to transform energy dependency on fossil fuel to the renewable source
of power mainly solar energy by creating the policy conditions for
its diffusion across the country as quickly as possible. Ministry of
New and Renewable Energy (MNRE) started planning to establish strong
policy framework for this mission. Before announcement of this
mission India had installed capacity of mealy 17.8 mw.
It means MNRE
has to establish entirely new industry. Even though it was a hard
task to develop optional power source which is relatively costlier
than conventional sources under the variating global economic
conditions. MNRE successfully managed it by implementing various
plans. And at the end of October 2012 mission crossed milestone of
installed capacity of 1000MW. Since announcement of the JNNSM, Indian
solar industry has been facing many hurdles related to the global
over capacity, financial backups, loose RPO enforcement conditions
and recently born TRADE war.
The Indian Solar (PV)
Manufacturers’ Association on behalf of three Indian cell
manufacturers, namely, Indosolar, Websol Energy Systems and Jupiter
Solar had filed a dumping complaint against cell and module imports
from China, the US, Malaysia and Taiwan. This complaint was first
reported on January 2012 to the Directorate General of Anti-Dumping
and Allied Duties (DGAD) at the Ministry of Commerce. On November
23rd 2012, DGAD announced that it had found sufficient preliminary
evidence of dumping in India.
And investigation has started from that
day. The ‘period of investigation’ has been determined as between
January 1st 2011 to June 30th 2012 (18 months)
as part of the investigation, any entity that is directly impacted in
any manner by the duties is referred to as an ‘interested party’.
Ac-accordingly, an ‘interested party’ can be any of the
following: domestic industry on whose complaint the proceedings are
initiated, exporters or the foreign producers of the like articles
subject to investigation, importers of the same article allegedly
dumped into India, government of the exporting countries, trade or
business associations of the domestic producers or importers of the
dumped product.
Factors,
which are reducing the cost of Chinese product
- Strong governmental support
At the beginning of
2008 Chinese government sense the future aspects of the solar PV
industry worldwide, which was the triggering point for them and
accordingly they began their massive capacity formula. Govt had given
free land to the pv manufacturers, quick clearance for the projects,
large benefits in terms of 1% -2% interest rates on loan, tax
benefits on large exports, etc. due to all these reasons Chinese
companies were thrive to expand their scale and vertical integration
model.
- Scale and vertical integration
China has some of worlds largest PV
manufacturing companies which cover almost half production market
worldwide. Suntech has annual production capacity of 2000 MW, while
as the total module production capacity in India
is about 1.5 GW and cell capacity is about 500 MW. Chinese
manufacturer are surviving in this surplus supply circumstance, is
because of their vertical integrating chain of supply, so as per
market condition they have a scope to shift their margin along the
chain. It is maintaining their flexibility in this harsh condition.
- Excessive export volume
Some experts doubting about their
export volume. According to them, Chinese firms are selling PV
modules below even the cash cost of production. Chinese manufacturers
want to show high export numbers so that state-owned banks do not
call in their loans and in the hope that they will eventually be
given a debt waiver.
Anti
dumping duty
Definition- “Dumping is supposed to occur
when the ‘export price’ of the goods is less than the ‘normal
value’ of the articles sold in the domestic market of the exporter”
Indian
solar (PV) manufacturer perspective
- Indian solar PV manufacturers industry is largely smashed by cheap, large scale imported PV modules and cells from the countries like china, U.S, Malaysia and Taiwan. In phase 1 Domestic Content Ratio DCR was mandatory only on crystalline technology, so that project developers were choose thin film technology which was mostly imported from U.S at low cost with the support of us EXIM bank. though Under the draft policy for phase 2 MNRE has considering several options to implement DCR it is hard to predict what kind of decision MNRE will take (by considering project developers perspective).
- In countries like U.S, china governments are providing lands at low cost, loan at 1-2% interest rates and subsidies financing model to the manufacturing companies due to all this they are capable to spend hefty amount on R&D and vertical integration which is reducing the cost of product. This is unfair for domestic players as they charged by 13% interest rates, low class technology, restricted capacity scaling. Many experts agree with the fact that thin film technology is not suitable for Indian environment but due to the low cost and attractive interest rates many developers were choose it.
- From ISMA point of view anti dumping should be in charge along with strict instruction on DCR.
Project
developer’s perspective
- Solar Independent Power Producer Association (SIPPA) has come up to oppose anti dumping duty. Accordingly to them instead of applying anti dumping duty government should have to take some long term measures to protect domestic solar industry.
- A recent research report by the Centre for Energy Environment and Water (CEEW) has pointed out that very few Indian developers have adopted Crystalline Technology due to the import restrictions under the Solar Mission 2020 initiative. “Though there is numerous advanced Crystalline Silicon Technologies available the world over, the developers’ choice is restricted to domestically manufacture solar PV panels in this category.
- Indian manufactures of crystalline silicon based modules import all major raw materials like poly silicon waters and cells and the prices of such raw materials have also crashed due to the heightened demand-supply gap. “In such a situation imposition of anti-dumping duty on solar photovoltaic modules would be counterproductive to the country’s solar aspirations.
- Also If anti-dumping is imposed on solar imports, cost of solar power in India is bound to go up which will be borne by distribution companies and commercial consumers (as most of the DISCOMS are already poor in state).
After assessing both the
perspectives MNRE should have to take unbiased decision to protect
Indian solar industry. Only imposing anti-dumping duties might work
for the short-term, but it might de-incentivize innovation and
investment in R&D. If India wants to improve its manufacturing,
then it is imperative that a competitive advantage is
maintained through investment is R&D and efficiency improvements.
Whether to impose duty or not is
not the big question, as industry is going to face little bit hard
situation by either decision, the question is what measures MNRE will
take to sustain domestic industry in long term basis.
Article Written by Sumit V Nawathe
For More Details contact: SNawathe@renewindians.com
Google Plus Profile: +Sumit Nawathe
