India May Require Wind-Turbine Suppliers to Open Local Factories

India may require international suppliers of wind turbines to establish local factories, according to a draft of new policy guidelines released by the government.

Turbines made by companies that sell more than 15 megawatts of machines in India without establishing an “adequate manufacturing facility” may be uprooted at their owners’ cost and will face “heavy” penalties, according to a document on the website of the Ministry of New and Renewable Energy. The ministry will accept comments on the proposal until Oct. 6.

The proposal may pose a barrier to Chinese suppliers such as Shanghai Electric Group Co. and Dongfang Electric Corp. that don’t have manufacturing facilities in India and have signed contracts to supply machines to local wind farm developers.

Turbine suppliers can’t agree to sell more than 15 megawatts of equipment until a manufacturing base is established and been certified by local authorities, the proposal said.

The statement didn’t specify whether a local assembly plant would meet the requirements or whether components must be made in India.

Dongfang signed a $203 million contract with India’s KSK Ltd. to supply 166 of its 1.5 megawatt direct-drive turbines, according to a Dec. 10 Hong Kong stock exchange filing. Shanghai Electric has a purchase order from KSK Group for 125 of its 2- megawatt machines, it said Sept. 25 in its semi-annual report.

Indowind Energy Ltd. (IEL), a Chennai, India-based owner of wind farms, placed a 28-megawatt order with Shanghai Electric in June, A. Raja Sukumar, head of corporate communications at BVK Group, Indowind’s parent, said in a Sept. 9 interview.

To contact the reporter on this story: Natalie Obiko Pearson in New York at npearson7@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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