11/1/2014 Status of PV Manufacturing in India - Print - Intersolar India

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Status of PV Manufacturing in India

In March 2013, the Ministry of New and Renewable Energy (MNRE) announced that the total solar PV

module manufacturing capacity in India touched 2000 MW. While the 2GW landmark appears to be

significant, it pales in comparison to the production capacity in China. According to IHS, the world’s top

PV supplier in 2012, Yingli of China, alone shipped 2300 MW of PV modules.

According to the MNRE, India had a solar cell manufacturing capacity of 848 MW and Ingot & Wafer

manufacturing capacity of 15 MW at the end of 2012. There is no Polysilicon production capacity. While

companies like Lanco had plans for an integrated PV manufacturing facility, the plan appears to have

been shelved, given the market turmoil. The same appears to be the case of Yash Birla group. The

only company that seems to be seriously exploring the option of setting up a Polysilicon plant is the

public sector company, Bharat Heavy Electricals Limited (BHEL). From the numbers above, it is

obvious that India seriously lacks a strong PV manufacturing ecosystem. The Indian manufacturing

sector is plagued by 3 major challenges:

 

Most of the manufacturers lack scale. Very few of them have manufacturing capacity of more than

200 MW. In short, the sector is extremely fragmented.

None of the companies are vertically integrated. PV Manufacturing is mostly concentrated at the

downstream of Module assembly. Some of the module manufacturers also make cells. But there is

hardly any upstream presence.

The amount of development of technology is relatively low.

 

Realising the importance of having a vibrant PV manufacturing ecosystem, the MNRE set an ambitious

target of setting up 4-5 GW equivalent of PV installed capacity across the value chain by 2022 in the

Jawaharlal Nehru National Solar Mission(JNNSM). In order to achieve this target, the JNNSM introduced

the domestic content requirement (DCR) in the first phase of the mission. However, none of the policy

initiatives at the state level (Gujarat, Rajasthan, Tamil Nadu, etc) have mandated any domestic

content requirement.

While the DCR was mandated by the MNRE with the good intention of catalysing the growth of the

domestic PV manufacturing sector, the DCR did not have the desired impact because of a loophole in

the DCR. In the Batch 1, Phase 1 of the JNNSM, it was mandated that all the crystalline silicon (c-Si)

modules used in the projects should be of Indian origin. For the Batch2 of the Phase 1, this mandate

was extended to solar cells also. However, Thin Film technology was exempt from the DCR, probably

because there were hardly any domestic manufacturer of Thin Film PV (except Moser Baer).

Due to this exemption, a majority of projects used imported thin film modules because they were

cheaper than c-Si modules at that time, but more importantly, they came with cheaper financing

options facilitated through the EXIM banks of some of the module originating countries. The result was

obvious – unlike almost any part in the world, Thin Films had a higher market share than c-Si

technology in India.

According to the MNRE, a total of 366 MW aggregate capacity had been commissioned under JNNSM up

to 31st January 2013. Of these, only 130 MW of projects were using indigenous solar cells / modules

technologies. In the Batch 2, more than 60% of the 340 MW opted for Thin Films. In fact, First Solar is

estimated to have about 20% of market share in the Indian PV module market.

The MNRE, acknowledging the lack of effectiveness of DCR in Phase 1, has announced that 75% of the

750 MW projects to be allotted under the Batch 1 Phase 2 of the JNNSM will be required to use local

content.

DCR Dispute

In February 2013, USA filed dispute against the DCR provisions in JNNSM in the WTO. While the MNRE

has gone ahead with the announcements about DCR, the WTO ruling against the DCR of Ontario,

Canada does not augur well for India’s DCR. While the MNRE insists that the DCR in India is different

from that in Ontario, it will have to be seen how the WTO views this.

 

11/1/2014 Status of PV Manufacturing in India - Print - Intersolar India

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Anti-Dumping Investigation

The global oversupply of PV modules has led to trade tensions across the globe, especially involving

China. In May 2012, US imposed Anti-Dumping Duties (ADD) on Chinese solar imports. In June 2013,

European Union also imposed ADD against Chinese solar imports. China responded to these ADD by

increasing the import duties on US and Korean Polysilicon.

Against this backdrop, the Indian solar manufacturers, under the banner of Solar Manufacturer’s

Association(SMA) filed a petition alleging dumping of imported solar PV modules from China, Taiwan,

Malaysia and the USA. After the preliminary hearing was held on July 18, 2013, some of the domestic

manufacturers filed a fresh petition to include manufacturers from EU and Japan in the anti-dumping

probe. This petition could prolong the investigation and its outcome.

The ant-dumping allegations have put the domestic manufacturers and the project developers on two

sides of the conflict. While the project developers oppose any form of anti-dumping duty imposition,

since that will increase the project cost and reduce options available for sourcing quality products,

domestic manufacturers counter that by saying that they do not have a level playing field due to the

unfair trade practices adopted by certain other countries.

The bottom line is that the outcome of the anti-dumping investigation will have a significant impact on

the solar sector in India.

Conclusion

Indian solar manufacturing is at a critical juncture. Consolidation of the sector has already been

happening at the global level and India is not going to be immune to that trend. The future growth of 

the Indian solar sector will depend a lot on the outcome of the anti-dumping investigations and the

effectiveness of the DCR.

 

Prepared for Intersolar India by Madhavan Nampoothiri, RESolve Energy Consultants

 

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