VIVEK CHATURVEDI, chief marketing officer of Moser Baer Solar, is a worried man. For the past 18 months, productivity at the company’s solar photovoltaic system plants has declined and the once-profitable business is on the verge of closure.
Chaturvedi and companies such as Tata Power Solar Systems and Indosolar are worried because Chinese companies are taking over the Indian market with photovoltaic panels and modules that are 30% to 60% cheaper.

“Ninety percent of the industry’s manufacturing capacity is idle because of a 500% to 600% jump in cheap imports from China between 2010 and 2011,’’ says Chaturvedi. At stake is Moser Baer Solar’s investment of Rs 10,000 crore and 25,000 jobs in a market valued between Rs 8,000 crore and Rs 9,000 crore.

The Indian manufacturers’ grouse is that the Chinese government is subsidising solar manufacturers, thereby artificially lowering prices. They argue that given similar subsidies, they too can scale up, drive down costs, and make solar energy viable in a short period.

Indian photovoltaic panel manufacturers expect that the World Trade Organization (WTO) will come to their rescue, but that hope may be misplaced. Shebonti Ray Dadwal, a research fellow studying energy sources at New Delhi-based Institute for Defence Studies and Analyses, says, “Since neither the General Agreement on Tariffs and Trade nor the WTO offers any clarity about trade in green technologies, contentious issues [such as dumping of Chinese goods] will have to be resolved through bilateral talks and not through the Dispute Settlement Body of the WTO.’’ Moreover, tracking instances of Chinese subsidies could be difficult, given the country’s non-transparent policy environment.

The Barack Obama administration imposed a 31% anti-dumping tariff on Chinese solar cells in May 2012. But India will face strong opposition from installation companies and solar project developers using Chinese panels and modules if it chooses to take the same path.

“It could throw a spanner in the works of the government’s National Solar Mission, which has promised
grid parity—providing electricity from solar power to households at Rs 2 to Rs 3 per kilowatt hour [the same rate as thermal power] by 2016-17,’’ says Sagar Gubbi, managing partner and co-founder of renewable energy consultancy EcoForge Advisors.

The prevailing situation puts the government between a rock and a hard place. Imposing tariffs on Chinese imports will affect the National Solar Mission. If the government does not take such measures, the Indian solar market may witness
a bloodbath.