India's fledgling solar-equipment industry under Chinese onslaught

Even as it had barely risen, the Indian solar-equipment sector has been eclipsed. S Venkataramani, who heads a grouping of 22 companies that account for 80% of India's solar-equipment capacity, counts the damages for those who make photovoltaic (PV) cells- the lifeline of a solar panel.

"Most PV makers are manufacturing at 10-15% of their optimum capacity, that too on and off, because there is no demand. Engineers are looking out for jobs in other sectors," says the general secretary of the Solar Manufacturers' Association, before launching a tirade against China for wrecking the economics of this industry globally.

It's the classic Chinese strategy: pumpprime its economy by driving exports.

Sometime in 2009, as countries took to solar power in bigger way, China provided an external charge to its solar-equipment industry. "Chinese equipment makers get free power for manufacturing, free land, incentives for exports and cheap capital," says Jagat S Jawa, director general, Solar Energy Society of India, an industry body.


According to Bloomberg New Energy Finance, an independent agency that tracks renewable energy markets, Chinese banks have given at least $43 billion (Rs 2,15,000 crore) in credit facilities to renewable-energy companies.

Global capacity of PV cells, which had increased steadily from 2,500 MW in 2007 to 7,400 MW in 2009, exploded to 29,600 MW in 2011 and is expected to cross 40,000 MW this year, according to the European PV Industry Association (EPIA).

Most of this is being built in China and being exported everywhere-the US, Europe, even India. According to McKinsey, the price of PV modules fell from $4 per watt in 2008 to under $1 per watt this January.

In India, manufacturers using those modules say they can produce solar power at `8 per unit, down from `17 per unit just 18 months ago. By extension, modules or cells produced by Indian companies are out of demand, both in India and abroad.



"Chinese are 25-30% cheaper then Indian manufacturers," accepts Tarun Kapoor, joint secretary, ministry of new and renewable energy.

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