Will India miss the Solar Manufacturing Bus?

I am not sure how many of the readers would have been exposed to India’s biomedical sector. Its a niche in the medical sector and comes with its own baggage of challenges and opportunities.

In year 1997, I had met some engineering and medical industry experts.They were discussing the new sun rising industry  in India: biomedical engineering.

The driving factors were clear: growing Indian population, need for medical attendance, the upcoming trend of private hospitals, new medical emergencies, and the acceptance / need of new technology.

The expectations in the value chain were R&D, manufacturing, IT and sales & service. But what really happened on the ground was that most of the biomedical equipments were imported and sold through dealers/partners/joint ventures, etc

The engineers either had the opportunity to become sales engineers, or service engineers. On the service side also, since the machines were quite sophisticated thereby eliminating complete service models…the engineers were expected to collect the faulty parts and send it back to country of origin /you replace the faulty part (you hardly need engineering skills for this).

In 2001 and again in 2005 when I looked at the industry, the scenario had not changed much…India had missed the manufacturing and R&D aspect of this industry and things don’t look like changing anytime soon.

Recently I also came across the news that Indian small scale industries specializing in manufacturing of holi toys were closing down. The reason being imported (Chinese) holi toys were more in demand; reasons varying from lower price, better shapes, new ideas and new toys. In 2011 the ratio of Indian holi toys vs Chinese holi toys were 60:40. This has changed to nearly 10:90.

So in yet another sector, India has lost the manufacturing aspect and has been involved in only sales and service.

On the solar side, from 2009 after the announcement of JNNSM, India saw new companies venturing into solar manufacturing mostly concentrated on solar panels. The condition of these manufacturers is well known. The sudden collapse of global solar market in combination with the lower prices had spelled boom for the manufacturing companies. In addition, the Indian market has grown slowly with not so favorable State Policies which do not distinguish between Indian and foreign solar products / equipments.

American Solar Panel companies till recently were well known by the fact that they provided EXIM financing for Indian solar projects if American solar panels were used. This trend has been further taken ahead by some Chinese companies. For a solar developer, debt financing at a lower interest rate is the key to profitability. To add to the woes, Indian solar PPA prices have kept on touching new lows every year from 15 to 9 to current 6.5.

The result has been that Indian solar panel manufacturers have been left with no competitive edge when selling panels or EPC services to Indian solar developers.

So here again, as we saw in the biomedical sector and the holi toys space, will India loose the opportunity to build a solar manufacturing base? The current situation and past track records say so.

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