India Solar Manufacturing Base Could Save $42 Billion, KPMG Says

Jul 31, 2014 7:57 am ET

July 31 (Bloomberg) -- India could save itself $42 billion in solar equipment imports by helping turn its ailing manufacturers into a viable industry, according to KPMG.

The findings come as India ponders whether to impose dumping duties on U.S. and Asian solar panel and cell suppliers in a bid to protect local competitors whose factories are operating at one-fifth of their capacity.

India may install as much as 100 gigawatts of solar capacity by 2030, KPMG projected in a study for the Indian Solar Manufacturers Association. Building a domestic manufacturing base would also create 50,000 jobs in the South Asian nation, according to the report.

“Indian manufacturing is competitive but suffers due to a lack of incentives when compared to other nations,” KPMG said. China and the U.S. have provided billions of dollars in financing, provided tax benefits and imposed anti-dumping duties to help their local industries, according to the report.

As a result, Indian factories are one-fifth the size of a typical Asian plant and don’t benefit from the economies of scale of their overseas competitors, KPMG said.

By failing to build a sustainable solar manufacturing industry, India risks repeating mistakes made in its electronics industry, according to the report. More than 60 percent of domestic demand for electronics are met through imports, accounting for 23 percent of the nation’s trade deficit, KPMG said.

“The industry was not given due importance during early stages of its evolution,” it said. “It has become very costly and difficult for India to catch up.”