Mr. Mohit Anand, Senior Consultant, BRIDGE TO INDIA, will be speaking on the ‘PV Landscape in India’ at the PV Manufacturing Summit in New Delhi on August 1st 2012.
The Indian PV manufacturing industry is in dire straits at the moment, running their plants well below capacity due to dwindling orders (refer to our latest INDIA SOLAR COMPASS). A fall in demand in European markets has impacted Indian manufacturers significantly, as they have almost entirely relied on them for business so far. In the Indian market, they are losing out to foreign suppliers that are more competitive than them on both price and technology.
- Module prices in India are consistently below the international levels
- Indian manufacturers are running their plants on extremely low utilization rates of 10-15%
- Chinese Tier-1 manufacturers have found it difficult to sell in India, facing competition from Tier-2 manufacturers
With the investments made to build new plants between 2009 and 2012 and the absence of orders, most Indian manufacturers now run their plants on extremely low utilization rates of 10-15%.[1] Indian manufacturers are waiting for the announcement of the new policy for phase two of the NSM. If the government announces a stronger protection mechanism for the second phase of the NSM, these Indian players are ready to ramp up their production. Indian manufacturers will need support from the government to survive amidst the over-supply in the market and become more competitive. Without political assistance the future of the Indian industry is not secure.
The rising supply from China is one of the most discussed issues in India’s PV sector. Suntech has so far sold 70MW and Trina Solar has sold 50MW to India. Both companies use a strategy of aggressive pricing. However, Chinese Tier-1 suppliers stated during Intersolar Munich in June 2012 that Tier-2 suppliers from China have been even more aggressive in the Indian market. As a consequence, module prices in India are consistently below the international levels and such companies have been largely unsuccessful in selling to the market. In the wake of recent trade barriers in the US against Chinese modules, the Indian domestic industry also started to lobby for setting import duties on aggressively priced Chinese modules (typically Tier -2). Some large Chinese producers with strong order books such as Yingli Solar have not sold to India yet and instead still concentrate on higher margin markets. With India’s overall market demand expected to exceed a cumulative 3GW in 2012 and 2013 these companies will need to find an appropriate strategy for the market.[2]
Two scenarios are possible as of now: First Chinese and other international late comers will adapt the market strategy of smaller module suppliers and offer aggressive prices. This will further decrease module prices and raise the pressure on the domestic industry, as well as on the less cost-competitive international suppliers. Second, companies may focus on new, growing market segments outside the FiT policies, build up their own project development teams or offer EPC services. None the less, the FiT driven segment will be the key segment in the next three years. BRIDGE TO INDIA expects that international Tier-1 suppliers will try to focus on this segment with the majority trying to sell modules to projects under the state policies.
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[1]Statement of Mr Venkataramani, General Secretary, Solar Manufacturing Association in Economic Times on June 8th 2012
[2] BRIDGE TO INDIA market model
