China's glass shortage, trade restrictions hit solar panel prices in India

Glass shortage in China has increased the price of imported glass used in solar panels. The cost of imported solar modules has increased by 22 per cent since June. Solar power projects, which had postponed solar imports due to Covid-19 and trade restrictions with China, are likely to face cost escalation.

India imports close to 90 per cent of its solar cells and module demand, of which 80 per cent is from China. Domestic solar equipment makers import glass panels whose price has increased 150 per cent in the past six months, according to industry estimates.

Animesh Damani, managing partner, Artha Energy Resources, said with changing technology the demand for glass had gone up, but there was a supply shortfall as the largest producer, China, was putting a cap on glass manufacturing. “In central and northern China, where glass is manufactured, the government has put restrictions on expansion.”

He said as solar panels with more power density are preferred now, the surface area of panels was increasing, further pushing the requirement of glass. Damani said the surface area of panels had raised by 10-15 per cent. Also, bifacial panels, having glass on both sides, which offer better commercial viability were also being used by project developers. While recently bid out solar projects would not be hit, those under construction and having pending orders might face cost escalation, said an industry executive. In a tender recently, the lowest ever tariff of Rs 1.99 per unit was discovered for projects in Gujarat.

Domestic solar panel manufacturers are in a fix with rising cost of equipment, most of which is imported. “Input costs such as glass, backsheets, aluminium frames for modules have risen significantly. One of the world’s largest glass makers is in India, but we import glass from China, Indonesia or Malaysia. Similarly, even though India is one of the largest aluminium producers in the world we import aluminium frames,” said Saibaba Vutukuri, CEO, Vikram Solar.

Kolkata-based Vikram Solar is one of India’s leading solar module manufacturers. In India, only one company, Borosil, meets bulk of the domestic demand. Pradeep Kheruka, chairman, Borosil, said the shortage was temporary, and with the current policy interventions by the Indian government, the domestic glass sector was looking at enhanced demand from the solar industry.

“Domestic glass industry is quite mature. India has foreign glass players as well, but they have withdrawn from flat glass for solar because of Chinese imports. For China, solar glass is a strategic product and they subsidise it so no one is able to withstand that cost,” Kheruka told Business Standard.

He said his firm had been paring costs and was able to compete with the imports.

Malaysia, which surpassed China in exporting solar glass to India last financial year, has been slapped with a countervailing duty at 9.71 per cent by the Indian Directorate General of Trade Remedies, Ministry of Commerce and Industry. However, Vutukuri said it was time India developed a robust ecosystem for indigenous solar manufacturing.

“This will have a multiplier effect on the economy in terms of creating jobs, increasing exports, and saving imports worth approximately $50 billion. We need a comprehensive policy framework encompassing both tariff and non-tariff barriers to boost domestic solar manufacturing,” said Vutukuri, adding that a Basic Custom Duty (BCD) needed to be introduced on solar imports immediately along with resolving the issue pertaining to the special economic zone equalisation levy.