<div>The demand for solar installation is growing and is expected to touch 35 GW this year globally, but the supply chain is in the process of virtual collapse. The nascent Indian manufacturing sector with 1000MW in cells and 2000MW in modules cannot compete with state sponsored predatory pricing, thus the Indian manufacturing is on the brink of collapse too.<br /><br />The reasons are attributed to the structural oversupply situation where we have about 200 per cent capacity versus demand in 2013. Eighty per cent of this capacity is located in China and Taiwan. This oversupply has led to a 2-year price decline regime and generated a dumping environment in the last 20 months. The Chinese have dominated this market with 55GW capacity alone and have loans of $44 billion, making them incur consistent losses (as is reflected in their balance sheets).<br /><br />The USA has imposed anti dumping & anti subsidy duty on China from 30 per cent to 250 per cent last year and the EU has imposed duties in June 2013. The duty level in Europe average to 47 per cent but investigation reveals goods are being sold 88 per cent below cost to capture the EU market by China. Consequently China has now 80 pwer cent of the EU market share.<br /><br />The situation is the same in India and the Indian anti dumping duty case is ongoing. Now 17 months from application and almost 7 months from initiation of the case, we can only hope and pray for an early and strong decision as the case is symptomatic. The Indian case also covers Taiwan, Malaysia & USA besides China.<br /><br />The most significant issue for Indian PV is the Policy of domestic content, a key implementation objective under the JNNSM. The local production of cells and modules and then extension of local content to inverters and BOS are part of the objectives of JNNSM under the NAPCC. This was allowed in a phased manner from 2010 to 2013, to culminate to 100 per cent local content irrespective of technology from NSM Phase II, i.e. 2013 to 2017 and beyond.<br /><br />The Solar Energy Industry Advisory Council (SEIAC) was set up under the chairmanship of Shri. Anand Mahindra with a clear mandate to advise options for the Government of India how we can meet our targeted objective of having a local manufacturing base of 4000-5000MW PV in our own country with a view to develop R&D as well as rapidly scale up the deployment of PV in India. India being in the Sunbelt has some of the lowest cost of solar energy harvesting globally and the sunshine is free!<br /><br />The Indian Solar Manufacturers Association (ISMA) is deeply concerned by the recent change in stance by MNRE to allow continuing imports under NSM Phase 2. We fail to understand how we can expand capacity and invite investments from overseas if we have no demand visibility for local existing plants in spite of the fact that India is now one of the fastest solar installation growing countries in the world and expected to be in the top 5 countries this year with an additional 1.5 to 2.0GW installation.<br /><br />We have a capital subsidy under the semiconductor policy called Special Incentive Package (SIPS) that covers PV with a threshold investment of Rs 1,000 crore and 25 per cent capex subsidy administered by the Department of Information & Technology and now we also have a revised SIPS called M-SIPS that continues to extend this facility with a lower investment band clearly indicating Government of India’s interest to expand the manufacturing base.<br /><br />Additionally, the National Manufacturing Policy launched last year clearly highlights Solar PV as a “Strategic industry “.<br /><br />In light of the multiple indications of the Government of India on its favourable view and intent to expand domestic manufacturing, including support from the Planning Commission, the nodal Ministry seems to have an alternative view i.e. to allow continuing imports under the federally supported NSM.<br /><br />With the government showing clear favouritism for cheaply priced dumped goods, it has confirmed its hesitation to comply with the overriding direction of the inter-ministerial view. Perhaps the lobbyists from China have convinced them that the local developers are inefficient and incompetent.<br /><br />With 10,000 crore invested (70 per cent of which is our PSU Bank’s monies), 27,000 employees and over 70 cell and module makers in this country, we risk our utter demise and loss of national assets in light of ambiguity and lack of clear policy with strong domestic content. More than 70 per cent of the cell makers are either in Board for Industrial & Financial Reconstruction or Corporate debt restructuring adding pain for our bankers and risking their loans.<br /><br />The world is watching India from being a visionary pioneer in 2010 with the Domestic Content Requirement mandate and that mandate is now being emulated by over 15 countries globally. Now they see India back tracking on its earlier commitments. The race to the bottom has already raised several quality issues on this 25 year performance product and MNRE deep intent to reduce the cost of solar power is adding fuel to this possible catastrophe.<br /><br />The USA has taken us to the dispute settlement commission on the Domestic Content Requirement issue and Ministry Of Commerce has already filed its official reply saying that the USA contention is invalid. By the way the USA has the same policy in over 6 states in USA and also under the Buy American Act.<br /><br />As a nation we should decide on this strategic and urgent need for solar in India. If you consider the import route as a long-term beneficial method with billions of dollars outlay (NSM 2 is pegged at 114,000 crore, $20 Billion) and dilution of our energy security based on dumping of goods now, so be it , but what about next year or the year after when the market returns to balance and prices and profits go up for those who survived with or without state support? Then you expose yourselves like EU did with Russia for Gas and USA did with Middle East for Oil.<br /><br />Our balance of payments and current account deficit (CAD) issues are indicative enough of what we should do to have a balanced economy and ensure employment and internal self sufficiency but it seems MNRE is only concerned with artificial price that clearly has no were else to go but up. The sooner we recognise the real cost of solar, the better.<br /><br />(<em>S. Venkataramani, CEO, Indo Solar and General Secretary, Indian Solar Manufacturers Association (ISMA)</em>)</div>
