Tuesday, December 20, 2011

Global Solar Panel Trade Fight Expands to India

I've often noted how trade disputes have a habit of reproducing in other jurisdictions, and with the United States and China duking it out over trade in solar panels and other "green" technologies, it was only a matter of time before other countries got into the mix.   But even I'm a little surprised at just how fast India has gotten involved:
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 yesterday. 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. and Moser Baer India Ltd. 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. 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.

“It’s a disaster in the making,” said K. Subramanya, chief executive officer of Tata BP Solar, 51 percent-owned by BP Plc and India’s third-biggest cell and panel maker. “I’m feeling a bit of anguish because we want solar to succeed but we need fair competition.”...

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, according to Bloomberg New Energy Finance.

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.

“We’re on the same wavelength as the U.S. manufacturers,” Indosolar Managing Director H. Rahul Gupta said by phone, referring to an Oct. 19 complaint lodged by Bonn-based SolarWorld AG’s U.S. unit and six unidentified U.S. companies....

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....

Indian manufacturers [also] 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.
For the last two years I've warned that massive "green technology" subsidies from the United States, China and other governments, combined with the nations' efforts to boost green exports in order to stimulate their economies, created a global market that was ripe for trade conflicts.  Now, green trade disputes are popping up at the national level and the WTO, and many of the subsidized companies are going bankrupt.

Maybe at some point, the US government will get the message and stop gambling taxpayer money on this big global mess, but I'm not holding my breath.

1 comment:

agriculture investments said...

Good for India for standing up for itself. The US Gov't should NOT be in the business of subsidizing companies and picking winners. Having said that though, the much bigger problem is China. They provide massive subsidies to their manufacturers in the form of free land and cheap state bank loans. It dwarfs what the US does. China's GDP is 50% investment based and only 36% consumer spending based - that is a very skewed economy and it cannot last forever. Good for India for pushing back.