The solar panel manufacturers in India have been asking the Indian government to provide a level playing field against cheaper imports. The Indian solar module manufacturers had earlier lobbied for anti-dumping duties on imported equipment citing the reason that Indian manufacturers have been hit hard by the surge of imported solar power equipment in the country.
To protect the domestic manufacturers the Indian government had also looked at increasing restrictions on the use of imported equipment in the second phase of the ambitious National Solar Mission.
Following this proposal, the US intervened to protect the interests of the American manufacturers. The case went to the World Trade Organization where India was not very successful in defending its actions.
The Indian solar power producers said that lower costs and better efficiency of equipment make them prefer imported solar panels.
This is one side of the Indian Power Sector’s coin.
You will be surprised to learn that on the conventional side also, a similar event is happening with Power equipment makers asking the government to make domestic equipment sourcing mandatory for mega power projects.
The reasons for asking for this protection is that the Indian companies have made huge investments in the power equipment sector but now more than 25,000 MW of power equipment capacity is lying idle. Power generators are meanwhile happy to work with foreign power equipment companies e.g. Of the 117 gigawatts of projects ordered for the 12th Five- Year Plan, almost 45% were bagged by foreign players, led by the Chinese.
Experts estimate that private power equipment makers may make losses of over Rs 1,000 crore a year due to lack of orders.
The Indian power generators say that buying equipment from India is costly resulting in higher project cost; thereby translating into higher electricity tariff. Keeping in mind the fact that States are not buying power due to their weak financial health; higher electricity tariff may not find takers.
Add to this the other side of Indian economy; the growing CAD; current account deficit. To keep this in check the government is already discouraging gold imports and has reduced the limit for remittances made by individuals to $75,000 from $200,000 per financial year.
On the power sector side, the last 5 years have seen import of electrical equipment in India grow at a CAGR of ~ 30%; at a figure of around 15-20 billion USD.
Will power equipment also go along the “Gold” way to curb imports and spending of foreign exchange?
On the other hand, the gold manufacturers in India are saying that restrictions on raw material will encourage import of gold jewelry from other countries; thereby hitting the Indian gold jewelry making industry.
Somehow the conclusion or the moral of the story is coming out to be that (not the purpose of my writing this piece) it is not an easy path ahead for Indian manufacturers ; be it power equipment, solar panels or gold jewelry.
Not an easy task to do for the government to convince Indian and foreign investors/companies to invest in Indian manufacturing.
Meanwhile, can the government look at a form of incentive that will benefit power developers if they use Indian power equipment/solar panel? Maybe an interest subsidy.
The incentive can be such that it encourages the Indian manufacturer to keep costs and quality in check which when combined can encourage Indian power developer to go for Indian made power equipment.