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Indian solar module manufacturers have petitioned the Ministry of New and Renewable Energy to recommend to the Ministry of Finance to impose a 15 per cent Customs duty on imported modules and cells, various sources in the industry have told Business Line .
Tata BP Solar, which has been around for a quarter century, is India's oldest solar cells and modules manufacturer. It has a module manufacturing capacity of 125 MW. Indosolar is India's largest module manufacturer with a capacity of 180 MW.
Although the country has rolled out the $20-billion-worth National Solar Mission, the preamble of which promises to engender local manufacture, neither Tata BP Solar nor Indosolar has any orders on hand. The heads of both companies have confirmed to Business Line that work has come to a complete standstill in their factories.
‘Death of manufacturing'
There are 51 module manufacturers in India, nine of whom also make cells. These units have a combined capacity of 1,500 MW. Today, this industry is working at less than a fifth of the capacity, although, thanks to the solar mission and the various State programmes, some 1,000 MW worth of plants are under construction in India today. The demand is being met by imports.
Noting that Tata BP Solar has capacity, track record and experienced project execution team, and yet no orders, Mr K. Subramanya, CEO of the company, calls it the “death of manufacturing in India.”
Large-scale dumping
The Indian industry's case is that there is large-scale dumping of solar modules and cells into India. Due to the drop in demand in the biggest market, European, Chinese and American manufacturers are left holding huge inventories which they want to liquidate, if necessary, at throwaway prices.
(The story goes that when the US company, Solyndra — whose infamous bankruptcy after having consumed $535 million of public funds is a subject of a US Congressional committee investigation into which the White House has been dragged — wanted to offer solar modules at a dirt cheap price of 60 cents a watt, an Indian developer bargained for 5 cents lower. To the Indian company's surprise, Solyndra agreed.)
Thin film problem
Another sore point with the Indian industry is that while the solar mission mandates local manufacture in case the developers choose the ‘crystalline silicon' route, it puts no such condition for the ‘thin film' technology. As a result, a large number of solar project developers have chosen to import thin film modules.
Accentuating their problem, the US Exim Bank has backed American companies offering credit at extremely low interest rates. One industry source said that the Exim Bank rate works out to 8 per cent on a fully hedged basis, while no Indian bank will lend at less than 13 per cent.
The policy of the government has choked the Indian industry, says Mr Rajinder Kumar, Secretary-General, Solar Energy Society of India.
The Indian industry is also peeved that while fully made solar modules could be imported duty-free, the raw materials needed for making the modules in India suffer a 24 per cent Customs levy.
Industry sources also note that if Customs duty is levied, the developers who have won projects under the recently-concluded round of the Solar Mission will be severely impacted.
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