India’s solar power producers are awaiting a ray of hope

Workers at Gujarat Solar Park in India Reuters
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  • Indian government had set a target to achieve 100 GW solar energy by 2022. However, a Crisil report said that India can achieve 70-80% of its aim.
  • India will need to create a platform for domestic manufacturing along with favourable policies.
  • India recently imposed 25% safeguard duty on imports from China and Malaysia, which also hurt Indian manufacturers.
The Indian solar industry has been shining bright over the years with the government pre-achieving its initial target of 20 GW solar energy by 2022. Now, even with a renewed target of 100 GW by 2022, it is looking increasingly unlikely the country will hit the number unless the government steps up efforts.

According to a recent Crisil report, if India wants to head towards the 100 GW goal, it has to bring in policies in the Interim Budget 2019 that will change the fate of the solar industry.

Thus far, the industry has seen a favourable push by the Indian government such as the development of solar parks. But also faced setbacks with an added safeguard duty on solar panels imported from China and Malaysia, which is adding to the costs of the manufacturers.

Platform for domestic manufacturing

Specifically, India will need to reduce import duties or push the growth of manufacturing in India of solar equipment, to boost growth.

“The decrease in import of solar equipment will only be possible if domestic manufacturers are given a platform, through subsidies and schemes that allow us to showcase our capabilities compete with the global best. Currently, most solar manufacturers in India have to channel their focus on competing with low quality imports at unsustainable prices, said Sunil Rathi, Director, Waaree Energies.

China’s dominance in the manufacturing of solar modules has resulted in many Indian manufacturers depending on them for the implementation of solar projects in India. In 2017, Chinese solar manufacturers alone were responsible for 68% of global solar cell production and more than 70% of the world’s production of solar panels or modules.

“The required financial support will help, as most solar cells are imported, adding to the manufacturers’ costs,” said Rathi.

Reduced taxes

Experts believe that the upcoming Interim Budget will be crucial, as it not only would help manufacturers to gauge the support that the Government plans give the sector, but also understand how it envisions the way forward for the industry.

“We hope that the government continues to focus on reducing the corporate tax rate to help the country move towards a lower tax regime,” said Andrew Hines, Co-Founder, CleanMax Solar.

Taxes and duties remaining stable is a big hope from Indian players.

“A universal anti-dumping policy and a more stringent safeguard duty would curb an influx of low quality products, and also instil confidence within the sector,” said Rathi.

Rathi added that the recent proposal regarding the Bureau of Indian Standards (BIS) Certification has been welcomed by the solar industry and will ensure quality raw materials are made available to manufacturers. It is likely to also attract more investment from players, both national and international.

Rooftop solar capacity

According to a report by Bridge to India, the rooftop solar capacity addition in India is projected to be 2,368 GW in 2019, 49% higher than in 2018.

To expand the rooftop industry to other customer segments, Hines believes that incentives could be more productively redirected to the residential and MSME segments. This could help develop those segments that are nonexistent today but have huge potential.

“A transparent and consumer-friendly feed-in-tariff for residential consumers would be a great way to spur growth in this segment, but the policy should be well thought through to be effective,” said Hines.

With India taking the lead along with France in the International Solar Alliance, an alliance of more than 121 countries, the government will have to make way for growth by bringing forward policies the industry wants for progress.

See Also:
If India’s solar energy is cheaper than coal, why isn’t the industry thriving?

India's solar installations see a big drop after years of strong growth

Niti Aayog to promote India as renewable energy hub, output to be hiked fourfold
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