Solar Firms to Face Margin Squeeze if Tariff Shield Ends: SEBI RA
The Indian solar panel manufacturing industry is on the verge of facing a significant margin squeeze if the government protection shield ends, according to a SEBI-registered analyst, Nikhil Gangil. Gangil’s warning comes as the global solar panel market is experiencing an oversupply, mainly driven by Chinese manufacturers who are flooding the market with panels at prices often below cost to offload excess inventory.
In a recent report, Gangil highlighted that the solar panel industry in India is heavily reliant on government protection, and if this protection is withdrawn, Indian solar panel manufacturers could be priced out of the market almost instantly. The report also noted that the current oversupply has led to a significant decline in solar panel prices, making it challenging for Indian manufacturers to remain competitive.
The solar panel industry in India has been growing rapidly over the past few years, driven by government initiatives to promote the use of renewable energy sources. The industry has seen significant investments, with many new players entering the market. However, the industry’s growth has also led to concerns about the impact of an oversupply on the market.
Gangil’s report suggests that the current oversupply in the solar panel market is primarily driven by Chinese manufacturers who are struggling to offload excess inventory. To achieve this, they are pricing their panels below cost, which is leading to a decline in prices globally. This has made it challenging for Indian solar panel manufacturers to remain competitive, as they are not able to match the prices offered by Chinese manufacturers.
The report also noted that the Indian government has been providing protection to the solar panel industry through various measures, including anti-dumping duties and safeguard tariffs. These measures have helped Indian manufacturers to compete with Chinese manufacturers, but if these protections are withdrawn, Indian manufacturers could be priced out of the market.
The impact of an oversupply on the solar panel industry is not limited to Indian manufacturers. The industry as a whole is experiencing a significant decline in prices, which is affecting the profitability of solar panel manufacturers worldwide. The decline in prices has also led to concerns about the long-term viability of the industry, as manufacturers struggle to maintain profitability.
In addition to the oversupply, the solar panel industry is also facing challenges due to the global COVID-19 pandemic. The pandemic has led to a decline in demand for solar panels, as countries around the world have implemented lockdowns and other measures to slow the spread of the virus. This decline in demand has led to a significant decline in prices, making it challenging for solar panel manufacturers to remain profitable.
The Indian government has been taking steps to support the solar panel industry, including providing protection through anti-dumping duties and safeguard tariffs. However, if these protections are withdrawn, Indian solar panel manufacturers could be priced out of the market almost instantly. The government will need to take additional measures to support the industry if it wants to promote the growth of renewable energy sources in the country.
In conclusion, the solar panel industry in India is facing a significant margin squeeze if the government protection shield ends. The industry is heavily reliant on government protection, and if this protection is withdrawn, Indian solar panel manufacturers could be priced out of the market almost instantly. The industry is also facing challenges due to the global COVID-19 pandemic, which has led to a decline in demand for solar panels. The government will need to take additional measures to support the industry if it wants to promote the growth of renewable energy sources in the country.
Source: https://stocktwits.com/news-articles/markets/equity/sebi-ra-cautious-on-solar-firms/chlanHVRbCV
