India May Join U.S.-China Solar Trade Spat
India may jump into an escalating
U.S.-China trade fight over solar energy as local manufacturers lobby New Delhi
for protection against imports from rivals including First Solar Inc. (FSLR)
and Suntech Power Holdings Co. (STP)
India may initiate an anti-dumping probe in a month focused
on imports of Chinese solar products, China’s Commerce Ministry said in a
statement on 18 December. India’s Commerce Secretary Rahul Khullar
declined to comment in a phone call.
Indian manufacturers are also seeking a 15 percent tariff on imports of thin-film solar panels, the
country’s Renewable Energy Ministry Secretary Tarun Kapoor said in an interview. The biggest thin-film panel
company is Tempe, Arizona-based First Solar.
Indian suppliers such as Tata BP Solar India Ltd.,Indosolar Ltd. (ISLR) and Moser
Baer India Ltd. (MBI) have failed to benefit from a rule intended to spawn a
domestic manufacturing hub in one of the world’s fastest-growing markets.
Instead, low-cost Chinese rivals like Suntech
and Trina Solar Ltd. (TSL) and U.S. firms backed by preferential trade finance
including First Solar have reaped most of the equipment orders for 1,100
megawatts of plants to be built by January.
Local
manufacturers have received almost no orders from developers building plants in
India and are producing far below their factories’ full capacity, Subramanya said. India’s total manufacturing capacity is
about 1,500 megawatts of panels and 500 megawatts of cells.
Indosolar, the nation’s biggest cell company, stopped production in
June and has defaulted on 2.75 billion rupees ($52 million) of long-term bank
loans as its business became”unviable,” Fitch Ratings
analysts Vivek Jain and Salil
Garg said in a Dec. 5 note. They attributed the
company’s problems to a 62 percent plunge this year
in the selling price of cells to about 52 cents a watt amid intense Chinese
competition and declining demand in Europe where governments cut subsidies.
The complaint alleged Beijing uses cash grants, raw-materials
discounts, preferential loans, tax incentives and currency manipulation to
boost exports of solar cells.
The Indian complaints extend to both U.S. and Chinese
exporters.
U.S. and Chinese suppliers have benefited from Indian orders
because of cheap credit provided by state-backed lenders, said Anmol Singh Jaggi, director of Gensol Consultants Pvt., which
advises project developers.
Indian projects that import U.S. equipment may be eligible
for loans from the Export-Import Bank of the U.S., which charges about 3 percent to 4 percent interest.
After hedging, the cost of borrowing comes to about 9 percent
compared with 13 percent if they buy and borrow
locally, he said.
In some cases, state-backed Chinese companies are offering to
supply equipment and get paid two years later, he said.
U.S.
and Chinese imports can be brought into the country tax-free, whereas Indian
manufacturers have to pay duties on raw materials to make the same products.
U.S. panel makers including First Solar and Abound Solar Inc. have also
benefited from an exemption for thin-film products in the government’s Solar
Mission program that requires developers to use local equipment.
Indian manufacturers have asked the renewable ministry to
waive duties on raw materials and supplies and to impose a 15 percent tariff on imports of thin-film panels, the
ministry’s Kapoor said by phone from New Delhi.
“Maintaining open markets globally is
critical to making solar an affordable and meaningful part of the energy mix,”Alan Bernheimer, a First Solar spokesman, said in an
interview. He wouldn’t discuss the Indian trade complaints because the company
hasn’t seen any details of the proposals.
The U.S. International Trade Commission on Dec. 2 took the
first step toward imposing added tariffs on Chinese solar imports, voting
unanimously on the petition that called for anti-dumping and countervailing
duties. The commission is now holding a full investigation.