Failed export strategy killed Indian manufacturers

India’s solar manufacturers found themselves unable to compete with imports because a strategy of building capacity for export markets collapsed, leaving them saddled with huge costs to recoup and unable to compete with foreign products, according to exporters from China, Taiwan, the U.S. and Malaysia.

The 156-page reporting revealing details of the Indian ministry of commerce’s anti dumping (AD) investigation into solar imports fails to adequately rebut the charge the spiralling fortunes of Indian producers were down to a failed export policy.

Manufacturers from the countries affected pointed out Indian solar companies hugely expanded capacity to target selling their own competitively-priced products outside India and when the hoped-for exports failed to materialize, they were left with huge interest costs related to the capital borrowed to invest in capacity and rocketing depreciation charges as factories sat idle.

With representatives of the injured parties offering up the fact 80% of Indian manufacturing capacity sits idle to help illustrate the injury they have suffered, the case against Indian producers seems to stack up.

Foreign solar manufacturers told Indian investigators, fixed costs from the failed export project, such as interest and depreciation charges, meant Indian manufacturers had to recoup losses from the tiny proportion of the domestic market they had, meaning their products were naturally more expensive than imports.

Exports costs were segregated out

Claims by injured Indian manufacturers they had segregated out the losses caused by their export travails were merely echoed by AD investigators, who stated: "Although during the POI (period of interest – 2011 and the first half of 2012) there is a decline in exports, the domestic industry could not take advantage of increased demand in India by improving its domestic market share, due to dumped imports."

Exporters pointed out Indian domestic manufacturing actually expanded during the period for which the complainants are claiming injury and say the prohibitive costs resulting from the export strategy were the reason they could not benefit from rising demand in India.

But investigators accepted the complainants’ arguments they were squeezed out of rising demand in their home market by dumped imports, citing figures which showed the share of the Indian market taken by exporters rose from 71.12% to 85.26% for the period in question while the narrow number of companies classed as Indian domestic industry, saw their market share decline from 1.43% to 0.58%.

The ministry has recommended a range of AD duties be applied to solar cells and modules imported from the countries in question and the solar industry is waiting to see whether the new government of Narendra Modi takes up the advice.