Bridge India

Weekly Update: Is this the time for Indian manufacturing sector to start attracting investments?

In a recent meeting of members of National Solar Energy Federation of India (NSEFI), Solar Alliance of Gulf Cooperation Council (GCC) and Saudi Arabia Solar Association, it was announced that as many as a dozen manufacturers from Gulf countries have shown interest in setting up manufacturing joint ventures with Indian companies (refer). We also understand that some of the Chinese manufacturing majors are scouting for similar opportunities in India.

  • The interest comes at a time when the Indian manufacturers are in a financial tight-spot and the government, unable to provide long-term road map for domestic manufacturing
  • The interest has been generated because of some reasons as per BRIDGE TO INDIA’s evaluation
  • Yet, there are structural issues such as long term blueprint for local manufacturing measures to enhance competitiveness that need to be addressed

This interest comes at a very opportune time as most Indian manufacturers are in a financial tight-spot and the government has been unable to provide a long term road map for domestic manufacturing. The government also seems to be dragging its feet on announcing the outcome of anti-dumping investigations. The only noteworthy policy in this area, the domestic content requirement under the National Solar Mission (NSM), has been very poorly thought out and has attracted back lash from project developers and investors.

BRIDGE TO INDIA believes that a combination of the following factors has helped to generate international interest into manufacturing in India:

1) There is a growing consensus that India will have a very large and important solar marketing future.

2) Existing anti-dumping duties and on-going investigations against Chinese manufacturers is prompting a search for local manufacturing opportunities.

3) Easing of over-supply situation and stabilization of prices has kick started a new global investment cycle. Global consolidation and technology upgradation are providing further catalysts.

4) There is a view that India is likely to continue its protectionist policies for promoting use of domestic content and a new government might be more favorable to domestic manufacturing.

However, structural issues such as a long-term blueprint for local manufacturing and measures to enhance competitiveness are yet to be addressed. If the new government is able to address some of these challenges, there will be a renewed hope for domestic PV manufacturing in India.

With some international manufacturers and investors out shopping, it might be time for domestic manufacturers to prep up their books.