Indian Tariffs on Solar Panels Ultimately to Hurt India’s Solar Targets?

A target of generating enough solar power to provide energy to 16 million homes by 2022 is a target for India which would transform the country in a solar power house.

While offering financial incentives to companies building solar panels, the government of the country has already approved dozens of new solar plants, rooftop projects and lighting systems.

However, there are reports that the Indian government is planning to impose and import tariff of 70 per cent on solar panels and this plan has divided the industry in the country. While manufacturers of solar panels claim that the tariffs would be critical in preventing China from gaining significant influence over the industry in India, installers claim that the tariff would completely deter the solar target for 2022.

According to industry estimates, between 80% and 90% of all of the solar panels in India are exported by China, Taiwan and Malaysia.

Sunil Kulkarni, head of the renewable energy business at Shapoorji Pallonji, an infrastructure company said that solar energy could get costlier by 45% because of the import tariffs.

“These tariffs will hurt the industry,” Kulkarni said.

An Indian court has for now suspended the implementation of the tariffs after Kulkarni’s company filed a suit against the tariff in the court.

There were no comments made by the Indian government.

A target of 100,000 megawatts by 2022 for solar power has bene set by the government from the present capacity of around 16,000 megawatts.

But without the use of cheap Chinese components, it would not be possible to achieve the target according to solar project developers.

“[Tariffs] will jeopardize the entire plan,” said Ketan Mehta, the founder and CEO of Rays Power Infra. “India does not have the [manufacturing] capacity anywhere close to what we want to do,” he added.

It would be “catastrophic” to impose a 70% tariff, said Vinay Rustagi, the head of renewable energy consultancy Bridge to India.

“Domestic manufacturers are unable to compete with their Chinese competitors because of obsolete technology, sub-scale operations and lack of domestic supply chains,” Rustagi said.

However, China would have too much of influence over the Indian solar industry on the whole if there is no support for domestic solar panel production, say Indian manufacturers.

“The Indian solar program cannot be blindly dependent upon China,” Dhruv Sharma, CEO of Jupiter Solar Power. The company has been pressing for higher import tariffs for solar panels.

“If you do not nurture domestic manufacturing, and the Chinese know that there is no option but for dependence on them, then anything can happen,” he added. “They can just turn off the tap.”

In the last two years, there has been a two to three-fold increase in the domestic production of solar panels, claims Sharma while adding that India’ s weak manufacturing base was because of cheap Chinese imports.

He added that it should not take more than 18 months for Indian manufacturers to produce all of the solar panels that India needs.

The U.S. has also slapped a high import tariff on solar panels in January to prevent cheap products being imported and to boost local manufacturing.

(Source: Money.cnn.com)

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Categories: Economy & Finance, Geopolitics, Regulations & Legal, Strategy

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