Inox bought Chinese solar company in America for 7175 crores
India has once again established its strong presence on the global trade front. In a big and competitive market like America, while on one hand the path is becoming difficult for Chinese companies due to strict rules, on the other hand Indian enterprises are rapidly expanding their foothold. Inox Clean Energy, a leading renewable energy company headquartered in Noida, has taken a big bet and acquired the solar manufacturing assets of a Chinese company in America.
Why is this historic deal of Rs 7175 crore special?
This energy company of Inox Group has spent approximately $ 750 million (about Rs 7175 crore) and purchased the manufacturing unit of ‘Boviet Solar’ located in Greenville, North Carolina, USA. Solar modules and cells are mainly made in these factories. The total generation capacity of the acquired assets is 6 GW. Bovet Solar was originally owned by Ningbo Bove Alloy, a Chinese company listed on the Shanghai Stock Exchange. Ningbo is the same company that supplies alloy to famous electric vehicle manufacturing companies like BYD. Disinvestment talks were going on for the last two months for this big deal. JP Morgan played the role of advisor in this sale process. Now this entire property will come under the control of the Indian company through ‘Inox Solar America LLC’.
Inox keeps a close eye on the American market
Why did Inox make such a big investment in America? It is important to understand the economics behind this. At present the demand for electricity in America is increasing rapidly. There is a huge expansion of Artificial Intelligence (AI), huge data centers are being built at many places. All these structural and technological changes require large amounts of clean energy. Devansh Jain, Executive Director of Inox GFL, believes that this is the most opportune time to capitalize on this increasing demand for energy in America. This step is an important part of the company’s “Make in America, for America” strategy. With this deal, Inox will get the direct benefit of the US Government’s scheme to promote domestic manufacturing (Section 45X). This will increase the company’s profits, and due to local production, uncertainties related to foreign policies will also be eliminated.
China’s compulsion became India’s big success
In fact, during the Trump administration, the rules related to foreign entities in America were made very strict. China’s renewable energy companies have been blacklisted by the Foreign Entity of Concern (FEOC). Institutions from countries like Russia, Iran, North Korea are included in this list. Due to this ban, Chinese companies were not able to get any tax exemption or government help in America. It was becoming difficult to survive there without government incentives. Taking advantage of this geopolitical change, INOX took this ready platform in its name. According to Akhil Jindal, Group CFO of Inox, this acquisition will provide an excellent ecosystem for the company to earn huge profits amidst the shortage of solar cells in the market.
