AISIA Warns of Stockpiling of Solar Equipment, Seeks Safeguards

Highlights :

  • Large utility scale projects in India can use domestic modules only at a higher price of the end power, which no-one seems to be willing to pay for.
  • AISIA, and the government need to push harder for faster residential, agricultural and even commercial solar roll out, to provide the kind of strong, local demand that will support domestic manufacturing for now,
AISIA Warns of Stockpiling of Solar Equipment, Seeks Safeguards

Industry body AISIA, or the All India Solar Manufacturers Association, has warned yet again of the dangers facing India’s domestic manufacturers. In a letter to the MNRE minister, the AISIA states that domestic manufacturers have been operating at 30% capacity, and the situation places at risk thousands of jobs in India. Almost 125 manufacturing units that impact 200,000 jobs face the brunt of Chinese competition, claims AISIA.

The body also adds that since April 2021, Indian solar module imports have been averaging 800 MW per month, with a cumulative 16 GW having been imported till February 2022. That points to a clear attempt to stockpile by large developers especially, according to the industry body. Imports have been particularly high ever since the safeguard duty expired in July, making it clear that developers with the financial heft have opted to stockpile, claims AISIA. Imports peaked at 3.21 GW in February 2022.

With the new customs duty regime set to kick in from April, the appeal seems more to ensure that no further concessions are considered by the government, even as large developers have been working backchannels to allow options like grandfathering for certain projects or other means to reduce the blow of 40% customs duty on module imports from April 1.There is a 25% duty on cell imports also due from the same date.

While the AISIA data on actual manufacturing capacity being utilised seems to bear out on checks with other relevant players like float glass manufacturers, the fact remains that in a year of unprecedented volatility, the government found its hands tied to take harsher steps. Although, with the solar PLI scheme/s in the world, domestic capacity will be a completely different ball game by 2025, especially in terms of backward integration. Domestic manufacturing, on a production base of about 14 GW currently, has produced just over 5.5 GW by industry estimates in FY 21-22 so far. That leaves a large gap for imports, which have been justified on cost as well as quality concerns. Other industry bodies like NIMMA have also urged the government to allow MSME sector to participate in the expanded PLI scheme to enable wider industry representation.

With the ALMM list acting as an effective non-tariff barrier and beginning to have an impact, one has to assume that concerns of domestic players, and their bodies like the AISIA will be managed best when critical policy changes enable expansion in the residential, agricultural (PMKUSUM schemes and the like), and distributed solar space. Simply because these segments are more elastic to price changes, especially higher prices needed by domestic manufacturers, unlike the utility segments that are locked in to bid prices won when the market conditions were different.

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Prasanna Singh

Prasanna has been a media professional for over 20 years. He is the Group Editor of Saur Energy International