Some of India's big­gest solar equipment makers are facing financial collapse, priced out by Chinese competi­tors as Prime Minister Narendra Modi's govern­ment prioritises cheap power over local manu­facturing despite his 'Make in India' push.

Though President Don­ald Trump is pulling the United States out of the Paris accord on climate change, India is sticking to its huge renewable energy programme. That has cre­ated a multi-billion-dollar market for Chinese solar product makers, who are facing an overcapacity at home and steep duties in Europe.

India's solar power gen­eration capacity has al­ready more than tripled in three years to over 12 gigawatt (GW) as Modi targets raising energy generation from all re­newable sources to 175 GW by 2022.

Chinese companies have gained the most from that increase, accounting for around 85 percent ofInd­ia's solar module demand and earning around $2 billion, according to in­dustry data. The total an­nual market could jump to more than $10 billion in the next few years go­ing by the government's capacity targets.

Local companies such as Jupiter Solar, Indosolar Ltd and Moser Baer India Ltd, however, are strug­gling to win contracts.

Orders funnelled through a domestic-con­tent policy have all but dried up after the World Trade Organization last September upheld an earlier ruling that found the move violated global trade norms.

As a result, Jupiter said it could shut shop by July after delivering their last orders this month; Indo­solar auditors have raised doubts over it remaining as a "going concern"; and Moser Baer says it needs support from its lenders to revive its solar busi­ness.

"TORPEDOED"

Indian solar power plant developers - including companies backed by Ja­pan's Softbank and Gold­man Sachs - are quoting ever-lower tariffs in auc­tions to win big projects, encouraged by steep drop in Chinese solar equip­ment prices.

That is squeezing out Indian cell and module makers, many of which have inferior technology, depend on imports of raw materials, have limited access to cheap loans and operate below capacity. Chinese modules are 10- 20 percent cheaper than those made in India, com­pany and industry execu­tives said.

"The WTO ruling has torpedoed everything. It's not a case of one company - we have largest cell operating capacity - eve­rybody below us will shut down one after another," Jupiter CEO Dhruv Shar­ma told Reuters by phone.

Chinese companies were selling solar cells in India at 19-20 US cents, around 35 percent below his production cost, he added.

There are more than 110 Indian solar cell and module makers registered with the government, out of which consultancy Bridge to India expects only a handful to survive.

Santosh Vaidya, a sen­ior official in the Ministry of New & Renewable En­ergy, said the government was working on several initiatives to promote the domestic solar manufac­turing industry. He did not elaborate.

GOING THE

TELECOM WAY

India's promise, and need, as a market for so­lar is obvious. It is one of the lowest per-capita con­sumers of electricity in the world and more than 200 million of its people are still not connected to the grid, making it crucial for the government to ag­gressively push for cheap power.

Despite its low labour costs, it is not alone in buckling under pressure from Chinese competi­tion. Earlier this month, Germany's SolarWorld, once Europe's largest so­lar panel maker, said it would file for insolvency.

Indian companies pro­duced an estimated 1.33 GW of modules last year out of the total capacity of 5.29 GW, according to Bridge to India. Total con­sumption of modules - 60 percent of a solar project's cost - was around 4 GW.

Solar project developer SB Energy, a joint venture between SoftBank, Tai­wan's Foxconn andIndia's Bharti Enterprises, said it had discussed the short­age of local manufactur­ing with the government.

"Lack of significant do­mestic solar manufactur­ing capacity is a concern, as this is a major gap," SB Energy Executive Chairman Manoj Kohli said, drawing a parallel with India's huge mobile phone market but negligi­ble local production.

Several company execu­tives said a lack of scale, absence of raw material supply chains and rapidly changing technology were some of other reasons In­dian firms were unable to compete with Chinese manufacturers such as Trina Solar and Yingli .

"The government is busy bringing power prices down ... but you can't build castles on graves," Gyanesh Chaudhary, CEO of module maker Vikram Solar told Reuters. "With­out a domestic manu­facturing ecosystem, no public policy can last for a long time." Reuters