India should ‘do a Trump’ to prevent the ‘dragon’ from seizing control over India’s ambitious plan to raise the share of solar power in the country’s energy mix, according to a local lobby group.

The group has asked the Centre to impose a safeguard duty to prevent dumping of solar cells and modules by Chinese firms.

“India’s Solar Mission seeks to achieve 100 GW of power by 2020,” says the Indian Solar Manufacturers Association, or ISMA. At current prices and import trends, it will result in net foreign exchange outflow of ₹2.44 lakh crore, or approximately $45 billion. India currently has the third largest solar installations in the world after China and the US.

The Indian solar and power growth trajectory is one of the biggest business opportunities of the next three decades, according to ISMA.

“This is a golden chance. It is a chance to leverage the manufacturing equipment and component base to unprecedented levels, giving rise to the most vibrant ecosystem with R&D centres being developed in India, generating millions of jobs,” the lobby group wrote in a letter to the government.

Chinese blueprint

China has established huge capacities to manufacture solar cells and modules with a clear intention and long-term strategy to dominate the global markets and script the future tale of renewable energy in the world, according to KPMG.

The US and the EU have imposed duties on import of cells and modules from China. Consequently, China’s solar gear exports to the US and EU have declined from 31.87 per cent in 2014 to 4.74 per cent in 2017.

At the same time, China’s exports to India have grown exponentially, from 2.92 per cent in 2014 to 32.32 per cent in 2017. Chinese companies tend to bring down prices significantly and push out the local manufacturers, according to ISMA.

India’s solar programme is currently China-centric, accounting for nearly 90 per cent of market share directly or indirectly through their off-shore companies.

China has an installed manufacturing capacity of 95 GW for cells and 105 GW for modules, with at least 10 GW of new capacities being added every year. Against this, China’s internal consumption was only 54 GW in 2017. The balance 60 GW was made for and had to be sold in global markets.

The EU and the US, which had huge solar manufacturing bases till 2013, have become marginal manufacturers.

“The heart of the solar manufacturing and R&D has now shifted to China. Ninety-five per cent of the global solar manufacturing base worth $100 billion has been wiped out by the Chinese over the last five years,” said HR Gupta, Managing Director of Indosolar Ltd, India’s biggest maker of photovoltaic cell by capacity.

Solar power is a strategic need for India, as it can potentially save $20 billion in fossil fuel imports annually by 2030. This can only happen, according to ISMA, by promoting solar manufacturing in India and not encouraging dependence on Chinese imports.

Increasing costs

Critics, however, argue that the imposition of safeguard duty could raise the cost of solar power.

“We estimate that safeguard duty may result in a temporary increase of ₹0.50 per unit of power, which will progressively get neutralised as manufacturing capacities get ramped up in India,” said ISMA. On the contrary, if a safeguard duty is not imposed, there will be direct, immediate and long- term implications, it added.

Current investments in solar manufacturing of ₹11,000 crore will fail and turn into NPAs, besides resulting in huge job losses, ISMA further said.

Safeguard duty on imports from China will result in immediate investments in manufacturing capacities in India. The industry estimates that in 18 to 24 months, India will have an integrated solar manufacturing ecosystem with an annual capacity of 15 GW. This will result in 250,000 new jobs.

India will emerge as a viable supply base of solar products for global markets with a potential to export $1.5-2 billion annually, according to industry players.

“Imposing duty, whether counterveiling, anti-dumping or safeguard, is not a whimsical concept. It is according to WTO protocol which every country uses. India has imposed anti-dumping duty on many items when there is evidence of selling below cost to dominate the market and destroy the local manufacturing base. The US has imposed anti-dumping, counterveiling duty and safeguard duty on Chinese solar products,” Indosolar’s Gupta added.

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