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Indian Solar Industry Unlikely to ever Recover from its Pygmytized State

, September 23, 2013, 0 Comments

The Indian solar industry has been clamoring for AD duties on cheap solar panel imports for a long time, however nothing has come out of its except an ongoing investigation.

Even as the USA and Europe have imposed quotas and duties on Chinese imports, India continues to import most of its 1 GW in solar panel each year. The Indian solar firms have mostly closed their factories or are running at extremely low utilization.

Most of the companies such as Moser Baer have become installers, writing down their solar manufacturing operations.

Even if a solar duty is imposed, the Indian solar industry will unlikely recover. The scale of the factories are too small and the companies don’t have the technology/expertise to scale up. Even as the Chinese firms have got huge experience thanks to massive government support, the Indian companies have got little experience as they were fighting to survive the onslaught. The $500 million of solar investment in the past 6-7 years is mostly gone to waste as the technology becomes obsolete. Despite terrific potential, the Indian solar industry will remain a non-starter now even if the government does provide support.

The Chinese companies have a big marketshare in USA despite the duties as they have massive scale advantages. USA is not being able to compete with the Chinese, despite being having longer operating history and better technology.

Most of the Chinese factories are built using European and US equipment. India does not have any competitive advantage except low labor costs. This is not enough to help. Like other sectors, India seems destined to a be a large solar product importer due to the shortsightedness of the government and crony capitalism.

The Indian solar developers have formed a strong lobby to allow cheap and low duty imports overpowering the nascent industry. This is the same case in thermal and capital goods imports.

According to a recent study, India has imported more than$500 billion worth of capital goods in the last 10 years. Most of this could have been made locally and prevented the trade deficit crisis.

But a government which runs on the whims and fancies of ministers concerned with their selfish agendas, nothing better can be expected.

About author
Sneha is a chartered accountant, having 7+ years of strong experience in Finance & Renewable Energy. Her area of interest & passion is clean tech - Solar & Wind and spends a considerable amount of time in writing about business and clean technology as a writer. She strongly believes in a sustainable and green living and writes in the blog green world investor. ...more