As reports of the border stand-off between India and China continue to hog headlines, one of the concerns raised is whether this would have a bearing on the solar sector in India because local project developers are dependent on solar cells and modules imported from China.
Of the $2.34 billion worth of solar equipment brought into India in 2015-16, a staggering $1.96 billion (83.61 per cent) worth of solar cells and modules were produced in China, Energy Minister Piyush Goyal told Parliament in November 2016. India imported solar and photovoltaic cells worth about $826 million from China during the April-September period of 2016-17.
Those in the industry feel border tensions will not affect the sector. "I don't think the current political situation will have an impact on the trade because whatever China exports, Indian trade is just a fraction of that," Indrajeet Dudile, co-founder and director, Sunshot Technologies, told indiaclimatedialogue.net. "Our trade with China will not be more than $60 billion vis-a-vis Chinese net exports, which is more than $2.5 trillion."
"Even if the tension is there, I don't foresee any issues till the time the Government of India takes a stand that imports from China will be stopped for all the sectors. It cannot be specific to renewables," said an official at the Ministry of New and Renewable Energy (MNRE).
"The rise in the cost of solar is a phenomenon that needs to be seen separately than that of the tension between India and China. An increase in prices will be due to the demand and supply considerations. It should not be linked to any kind of dispute between India and China. If the market signals are such that the demand for solar is increasing to the extent that it has an impact on the cost of solar, then this is a generic phenomena, which is not specific to the India-China dispute."
Sunil Jain, CEO and Executive Director, Hero Future Energies, believes that irrespective of the tensions, imports had to be impacted since the Indian government is already working on an anti-dumping duty petition filed by domestic manufacturers.
"China already has anti-dumping measures across Europe and the US. So, this had to come logically in India and it will definitely impact the imports, but I believe the impact will be partial as our back-end for domestic manufacturing is not ready yet; we are still importing wafers and cells from China," he noted.
"India has around 4 GW of solar panel assembly lines and around 1 GW of cell lines. With new technology, some of these cell lines would need an upgrade. At best, we can stop import of panels, but wafers and cells still have to be imported, and if China increases the prices of wafers and cells, are we ready for it?... Backward integration of domestic manufacturing has to be in place, if we are serious about curbing imports from China," he added.
"Till the time there is no specific issue of this nature that India should stop buying from China, it will not impact imports because it is not specific to solar modules. There are many other things which are being imported from China, including for the mainstream power sector and machinery," the MNRE official explained.
The last two years have witnessed an impressive growth of the solar sector. While India added 4 GW of solar power capacity in 2016, the generation capacity of solar rose from 2,650 MW on May 26, 2014, to 10,000 MW on March 10, 2017. However, in order to achieve its longer-term goal of 100 GW of solar PV capacity by 2022, India will have to bolster its domestic manufacturing capacity, which currently stands at around 6.5 GW for modules and 1.6 GW for cells, as per data from MNRE.
"In the absence of manufacturing, India will need to import $42 billion of solar equipment by 2030, corresponding to 100 GW of installed capacity," warned a report by KPMG.
The MNRE official said that the capacity of solar modules in India is 8,000 MW, while for cells it is 1,500 MW and this is not sufficient to achieve the government's aims.
"Some amount of import will be there because we have set ambitious targets, and therefore, we will have to import till the time we have manufacturing capabilities," he said.